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                             2501 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 27, 1991, Wednesday

The Gulf War;
Iran accuses Iraq of 'deadly delay' in Kuwait pullout



LENGTH: 552 words

IRAN'S government accused Iraq yesterday of a 'deadly delay' in deciding to
withdraw from Kuwait. Tehran Radio said, while the Iraqi retreat could lead to
peace, the apparent American insistence on toppling President Saddam Hussein
might deepen the crisis.

President Ali Akbar Hashemi Rafsanjani of Iran spoke of 'incorrect calculations
of Iraqi leaders and their delay in deciding to pull out of Kuwait' during a
meeting with Mr Rajiv Gandhi, India's former prime minister, in Tehran on a Gulf
peace mission.

'When (peace) efforts were on the verge of bearing fruit, opportunities were
lost one after the other and at every stage the United States and its allies had
a suitable excuse to increase the pressure,' Mr Rafsanjani said.

It is believed that most of Iran's leaders will be delighted if the allied
action results in the destruction of Mr Saddam. They may also be pleased to see
their main rival for influence in the Gulf region eliminated as a political and
military force.

Set against this is a genuine sympathy for Iraqi soldiers and civilians as
brother Moslems and a fear that the war will lead to a long-lasting American and
British presence in the region.

Although Iran no longer has obvious political designs on the Arabian states -
the broadcast of Islamic revolutionary propaganda to the Shia communities of
Bahrain and eastern Saudi Arabia has been much reduced - it has always mattered
to the Iranians that they be acknowledged by their Arab neighbours as the
leading regional power.

At present, Iranians are in no mood aggressively to assert their claim to a
leading role in Gulf affairs. Both the people and, as far as one can tell, the
government, have been somewhat over-awed by the speed of the allied victory.

Before the campaign began, the radical Hojatolislam Sadegh Khalkhali, a former
judge known for his zeal in executing opponents of the regime, was orchestrating
demands by students and members of the parliament for a force of Iranians to
fight alongside their Iraqi brothers. No such calls have been heard since
January 15.

In the coming weeks it is expected that Tehran will do nothing to offend the US,
with which it still has no diplomatic relations, because Iran will want a say in
whatever security arrangements are put together in the region after the end of
the war.

Although its rhetoric sometimes remains revolutionary, the Iranian government
under President Rafsanjani is quietly anxious to rehabilitate itself with the
rest of the world, politically and economically.

In Cairo yesterday Egyptian students held a third day of protests against the
Gulf war and vowed to avenge the death of a colleague in clashes with riot

Several hundred students poured off Cairo University campus chanting Egyptian
President 'Hosni Mubarak you coward, you are an American agent'.

The Palestine Liberation Organisation commented that the allies' reaction to the
Iraqi offer of withdrawal proved their aims went beyond regaining the emirate.

'The negative reaction of the coalition led by the United States to the
withdrawal from Kuwait demonstrates that the objective is really Iraq and not
Kuwait,' said Mr Abdallah Hourani, a senior PLO member.

Libya also said it would not tolerate allied attacks on Iraq following its
acceptance to quit Kuwait.


                   Copyright 1991 The Financial Times Limited

                             2502 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 27, 1991, Wednesday

The Gulf War;
Turkey anxious for place at the peace table



LENGTH: 515 words

TURKEY is throwing its diplomatic weight behind the idea of economic
reconstruction in the Gulf, aware that it could be locked out of political
settlement because of Arab suspicions.

Despite strong talk by President Turgut Ozal, Turkey's ability to influence any
peace settlement will remain limited, given that it has no troops in the
coalition force - much to the personal chagrin of the president.

No one seriously believes the Turkish military is poised to open a second front
in northern Iraq. The troop deployment to the border is largely a deterrent.
Besides there must remain doubt as to whether the generals would support such a

None the less Turkey's control of much of the region's water, and its huge
electrical power and agricultural potential make it an important player.
Turkey's contractors would also no doubt like a stake in the rebuilding of Iraq
and Kuwait.

The government has now made a bold pitch to improve ties with Saudi Arabia,
believing it will be Saudi money which will fund the reconstruction. Mr Ozal has
floated his own idea for a peace pipeline to channel Turkey's water to Syria and
Iraq, the Gulf states, Saudi Arabia and maybe even Israel. In November, Istanbul
is due to host an international water conference to settle the region's claims
to the Tigris and Euphrates, both of which originate in Turkey.

Egypt, Algeria and more predictably perhaps, Libya have publicly voiced concern
at what are perceived as Turkey's expansionist ambitions - one reason for last
week's diplomatic shuttle through the region by Mr Kurtcebe Alptemocin, the
Turkish foreign minister.

Mr Ozal has done little to dispel Arab fears with his talk of Mosul and Kirkuk,
the oil-rich Iraqi provinces to which Turkey has an historical claim. Mr Ozal
has also warned that Turkey would not stand by if Syria and Iran tried to
exploit the power vacuum. Nor would Turkey countenance any independent Kurdish
state in northern Iraq. Turkey, Mr Ozal says, wants a place at the negotiating

Foreign ministry officials privately regret some of the president's more robust
recent statements. But, by appealing to nationalist sentiment, Mr Ozal clearly
hopes to swing public opinion behind his Gulf policies, remembering the strong
feelings aroused by the unrest in Turkish speaking Soviet Azerbaijan.

Greece, understandably, is worried that Turkey's influence, particularly with
the US will grow following the crisis. Yet at the same time the Greeks are
probably only too happy to see Turkey preoccupied with the problems of its
southern neighbour.

By allowing the US to use its bases to bomb Iraq, Turkey sent ripples throughout
the Arab world. The policy created much unease at home.

President Ozal has lost two defence ministers, a foreign minister and his chief
of general staff since the crisis started. For all that polls now show his
support growing.

Turkey's dilemma remains, as Mr Alptemocin said in Washington this week, that
'Turkey is not a European country. We are part of the region. We are neighbours
to Iraq. We've lived together for centuries.'


GRAPHIC: Picture, Ozal, pipeline of peace proposal

                   Copyright 1991 The Financial Times Limited

                             2503 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 26, 1991, Tuesday

The Gulf War;
Non-Gulf Opec meets as oil prices slip



LENGTH: 361 words

SIX MINISTERS from the Organisation of Petroleum Exporting Countries (Opec) met
yesterday in Vienna for informal discussions on the outlook for the oil market.

Ministers from Libya, Algeria, Indonesia, Venezuela, Nigeria and Gabon arrived
in Vienna as oil prices lost another 40 cents after initial allied successes in
the ground attack to free Kuwait.

The price for Brent North Sea crude for April delivery dropped 10 cents to
Dollars 16.90 a barrel yesterday after losing over Dollars 2 a barrel last week
as the market faced the prospect of peace in the Gulf.

Mr Ginanjar Kartasasmita, Indonesia's oil minister, said he was concerned about
oil prices and the war. His view reflects the worry among Opec's smaller
producers that there will be a sharp decline in price once the war in the Gulf
is over.

Opec producers have more than made up for the loss of Iraqi and Kuwaiti oil
production, and output by the remaining 11 members is currently running at some
23.5m barrels a day. However, ministers have seen demand expectations repeatedly
revised downwards and the call on Opec oil is estimated to be lower than 21m b/d
in the second quarter of this year.

Ministers meeting in Vienna were discussing how production can be reined back
after the war since, even if Opec were to reinstate its pre-war production
ceiling of 22.5m b/d, it would probably not be enough to support prices. But,
between them, the smaller producers account for less than 40 per cent of Opec
output and can do little alone.

Venezuela, the largest producer at yesterday's talks, has increased its market
share within the organisation by 3 points to 11 per cent since the start of the
Gulf crisis. Mr Celestino Armas, Venezuela's oil minister, has suggested that
the country may be looking to maintain output above its quota level.

But Saudi Arabia is the key producer within Opec and could be in no hurry to
move back to its pre-war production levels - Saudi Arabia has increased output
by more than 3m b/d to 8.5m b/d since the crisis began.

The Gulf producers were opposed to the talks in Vienna, preferring to wait until
the war is over before discussing oil production.


                   Copyright 1991 The Financial Times Limited

                             2504 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 25, 1991, Monday

The Gulf War;
The men who lead the allied troops - The Commanders


LENGTH: 863 words


US commander Middle East: General Norman Schwarzkopf

Popularly known as 'Stormin' Norman', although at 6ft 3in and 18 stone, he
prefers to be known as 'the Bear', Gen Schwarzkopf has had a glittering army
career. Like all of his immediate subordinates, he served with distinction in
Vietnam, initially with the South Vietnamese airborne division and later in a
second tour as a battalion commander with the American 23rd Infantry Division.
He is experienced at desert warfare with experience in Egypt. He was deputy
commander of the recent operation in Grenada.

Deputy commander in chief: Lt Gen Calvin Waller

Lt Gen Waller's early military experience was in chemical and biological
warfare, in which he specialised between 1961 and 1970. He was a chemical
operations officer during a tour in Vietnam before being made commander of a
mechanised battalion in the US and a brigade in Europe. He became chief of staff
of the 24th Mechanised Infantry Division in 1983 and was chief of staff of the
18th Airborne Corps between 1984 and 1986. He was commanding general of the 8th
Mechanised Infantry Division before his appointment in Saudi Arabia.

Commander XVIII Corps: Lt Gen Gary Luck

Lt Gen Gary Luck has had experience in two elements of land warfare that may
prove critical in any land battle - helicopters and armour. He served in Vietnam
in Special Forces, before returning to the US for a course in helicopter flying
and returning to South East Asia to command a squadron. In 1975 he joined the
101st Airborne Division, now under his command. In 1989 he was made commanding
general US Army Special Operations.

Commander VII Corps: Lt General Frederick Franks

Like Gen Schwarzkopf, a graduate of the US military academy at West Point. He
served in Vietnam, in the armoured cavalry, and was wounded and in hospital for
21 months. He later served in Germany, commanding the 11th Armoured Cavalry
Regiment at Fulda, where the Soviet main thrust was expected in the event of
war. He has also served as commanding general of the 1st Armoured Division.

Lt Gen Walter Boomer: commander US Marines

Lt Gen Boomer led his troops into Saudi Arabia last August to protect the
country from a potential Iraqi invasion and now commands more than 60,000
marines. He saw action in Vietnam as a company commander and holds the Silver
Star and National Defence Service Medal.

SAUDI COMMANDER: Lt Gen Prince Khaled bin Sultan

Prince Khaled bin Sultan is one of King Fahd's many nephews and is the son of
Prince Sultan ibn Abdul Aziz, Saudi defence minister. He is nominally commander
of all foreign troops operating in Saudi Arabia.


Commander British Forces: Lt Gen Sir Peter de la Billiere

Sir Peter is the most decorated officer in the British army, enjoying a
spectacular career since he joined the army in 1952 at the age of 18. A fluent
Arabic speaker, he has spent 15 years in the Middle East serving in Egypt,
Jordan, Aden, Oman and Sudan. During action in Oman he won a Military Cross, to
which he added a bar while serving in Borneo. He has been commanding officer of
the Special Air Service, the British special force unit, as well as commander
British forces Falklands. General officer commanding 1st Armoured Division:Maj
Gen Rupert Smith

A former commander of the 3rd battalion the Parachute Regiment, Maj Gen Smith
has served in Kenya, Australia, Malta, Libya, the United Arab Emirates,
Malaysia, Belize and Zimbabwe. He commanded both armoured and parachute units
before becoming deputy commandant of the Army Staff College in Camberley in

Commander 7th Armoured Brigade: Brigadier Patrick Cordingley

After attending the Royal Military Acadamy at Sandhurst in 1963, Brigadier
Cordingley was commissioned into the 5th Royal Inniskilling Dragoon Guards in
1965. He subsequently served in Libya and Cyprus as well as Germany.

After various staff jobs, he took command of his old regiment in 1984 before
becoming military secretary at headquarters, United Kingdom Land Forces. He
assumed command of the 7th Armoured Brigade in 1988. His great passion is the
Antarctic and he was co-author of a book on Captain Oates, a member of Captain
Scott's expedition.

Commander 4th Armoured Brigade: Brigadier Christopher Hammerbeck

After a brief career as an articled clerk in a firm of London solicitors,
Brigadier Hammerbeck was commissioned into the 2nd Royal Tank Regiment in 1965.
After service in the UK and in West Germany he joined the Parachute Squadron,
Royal Armoured Corps in 1970. He returned to tanks with the 12th Mechanised
Brigade in Osnabruck, evenutally taking command of the 2nd Royal Tank Regiment
in 1984.


General Michel Roquejeoffre:

General Roquejeoffre joined the French engineers in 1952 before serving in
Algeria, Mali and Dahomey. After specialising in logistics, he was promoted in
1984 as commandant general of the French rapid action force, a 10,000-man body
designed to be sent to military crises around the world and now in Saudi Arabia.

He also has experience of commanding tanks: in 1987, he was appointed commander
of the 7th Armoured and 65th Mechanised Divisions.


GRAPHIC: Picture, General Schwarzkopf ; Picture, Lt General Waller ; Picture, Lt
General Boomer ; Picture, Prince Khaled ; Picture, Sir Peter de la Billiere ;
Picture, Brigadier Cordingley ; Picture, Brigadier Hammerbeck ; Picture, Gen
Michel Roquejeoffre

                   Copyright 1991 The Financial Times Limited

                             2505 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 22, 1991, Friday

Belgium comes a cropper over its border fences


SECTION: SECTION I; European News; Pg. 4

LENGTH: 645 words

THIS YEAR'S visa-issuing performance of Brussels, the soi- disant capital of
Europe, has probably not advanced much the cause of unfettered movement of
people around the brave new Community that beckons from just over the 1992
horizon. Nor has it embellished Belgium's reputation abroad.

First came the embarrassing presence of Walid Khaled, the spokesman for the
renegade Palestinian faction led by the terrorist Abu Nidal. He was identified
by a passing Flemish honorary consul for a small Far Eastern nation while
browsing in Brussels' Grande Place and was found to possess a tourist visa.

His tourism was linked to the deal last month whereby a Belgian family held
hostage in the Middle East was repatriated from Libya in exchange for the
release of a convicted Abu Nidal operative held in Belgium.

The affair, known locally as 'Silcogate' after the name of the yacht from which
the family was seized in 1985, was concluded amid press allegations of ransoms,
slush funds, and unaccountable 'scholarships' - confirmed in parliament by the
government - for Palestinian students.

Mr Mark Eyskens, the foreign minister, survived an attempt by parliament to
force his resignation. Three smaller heads in his ministry rolled instead. The
Justice and Interior ministries - seemingly responding to Belgium's complex
coalition politics more than collective responsibility - were content to
apportion blame to the Foreign Ministry.

The Brussels diplomatic corps, Gulf coalition representatives of which were
already irritated by Belgium's refusal to supply Britain with ammunition for the
war against Iraq, held their collective nose.

But now the 'Atlanticist' Foreign Ministry has been able to turn the tables, and
point the finger at the Justice and Interior ministries, for what the Belgian
newspaper Le Soir described yesterday as a 'Khaled affair in reverse'.

At the weekend, the Zairean opposition leader, Mr Etienne Tshisekedi, was
prevented from boarding a flight to Lisbon from Brussels, on the grounds that
the Justice Ministry had issued an order banning his entry into Belgium for 10
years from April 1 1988. A fracas ensued between Mr Tshisekedi's supporters and
the airport gendarmerie.

The Zairean politician, who had held talks with Belgian government officials
before returning to test President Mobutu's recently stated commitment to
democracy, was outraged. He accused the justice minister responsible for issuing
the order of being in the pay of Mr Mobutu.

He was referring to Mr Jean Gol, who now heads parliament's foreign affairs
committee and has promptly been dubbed 'Own Gol' in political circles here. This
is as much as anything for trumping the incident by publishing an article
calling for the 'normalisation' of Belgium's strained relations with Zaire,
comparing the bonds with the former Belgian colony to that of 'two old lovers .
. . who can't quite separate'. Mr Gol has started legal proceedings against Mr
Tshisekedi for defamation.

The increasing frequency of this sort of incident has caused much national
hand-wringing about the apparently haphazard nature of Belgian security policy
and diplomacy, which are already under scrutiny because of Belgium's lack of
clarity on the Gulf war.

It is, in addition, pointed out by diplomats in Brussels that Belgium is not
providing ideal publicity for the abolition of intra-EC checks on people
crossing frontiers which it has espoused along with its colleagues in the
so-called Schengen group of Community members (the other Benelux countries,
France and Germany).

The UK in particular is concerned that any such move will lessen its ability to
control everything from incoming terrorists and drug traffickers to rabid dogs.
Reliance by its neighbours on alert Flemish honorary consuls and controls on
entry at the time of exit are unlikely to dissuade it from this view.


GRAPHIC: Picture, Mr Mark Eyskens, Foreign minister kept his head

                   Copyright 1991 The Financial Times Limited

                             2506 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 20, 1991, Wednesday

The Gulf War;
Nato members pressed to restrict sales of arms



LENGTH: 1128 words

HIGHLIGHT: David White looks at proposals for western nations to sell arms to
each other instead of the Third World

THE war in the Gulf may give fresh impetus to work under way at Nato on a new
arms trade regime including tighter policies on western sales to the Third

That, at least, is the hope of the person most identified with the initiative,
Mr William Taft, Washington's permanent representative at Nato and former US
deputy defence secretary.

Proposals made by Mr Taft last March have led to preliminary studies on ways of
simultaneously lowering barriers on arms trade between Nato members and raising
the barriers on what and where they export. Up to now the main arms-producing
nations have done the bulk of their international defence trade not with each
other, but with developing countries.

Diplomats at Nato headquarters in Brussels emphasise that the issue of Third
World arms supplies is only one dimension of the discussions, But it is clearly
an aspect the US is anxious to push.

Mr Taft initially labelled his proposal the 'Defence Gatt.' He now admits that
the linkage with the General Agreement on Tariffs and Trade might prove 'a
little maladroit.' When Gatt ministerial talks collapsed in Brussels in
December, one of Mr Taft's colleagues remarked:'He might as well have called it
the Defence Titanic.'

His original idea was to include Japan, South Korea and Australia in the plan,
as non-Nato allies of the US. Some Nato partners baulked at what they saw as an
arbitrary selection of participants. 'I was talked out of it,' says Mr Taft. The
proposal has now been reduced to a 'Nato Gatt', although the US continues to
favour the association of other significant manufacturing countries.

Backers of the initiative deny that it will cut across whatever moves are made
by the European Community to bring defence procurement into its field of
competence. But both the US and the UK are anxious to ensure that steps towards
a common market in arms are not limited to Europe.

The plan has attracted little notice outside Nato's corridors, in a period when
the alliance been involved in the larger task of overhauling its political
objectives and military strategies.

However, the initiative was pursued last summer by Mr Philip Merrill, Nato's
assistant secretary-general for defence support and the senior US appointee in
the alliance bureaucracy. A task force to look into the merits of the idea was
set up in October.

Representatives of Nato national armaments directors are due in April to discuss
the task force's first-stage report covering the expected benefits and costs of
the proposals.

The project is based on the premise that no country, not even the US, can afford
to develop and produce advanced weapons just for the home market. 'Markets are
going to be by historical standards extremely small, and we have seen Third
World markets drying up,' Mr Taft says.

For the main arms-producing countries, the price of refusing to open up their
home markets to imports is high, he warns. 'We get more expensive weapons that
are probably less capable than we should have.'

At the same time, Nato countries cannot afford to export indiscriminately the
same equipment that they buy themselves. 'You have got to have two tiers,' Mr
Taft argues. 'We need to be very careful about what we sell to whom.'

Nato members should agree to 'sell amongst ourselves at the highest level' -
which would mean relaxing US controls on technology transfers - and to restrict
what they export elsewhere.

Mr Taft concedes, however, that it is 'not an easy project.' It has met mixed
reactions from other allies. The British, at the most enthusiastic end of the
spectrum, see it as an extension of their campaign for a more open European
market through the Independent European Programme Group. Other supporters
include the Germans, the Dutch and, more ambiguously, the French. At the other
extreme, Portugal, Turkey, Greece and especially Spain are worried about what
would happen to their own, vulnerable defence industries. And Belgium, Nato's
host country, has not been participating in the studies.

An even greater hurdle may be the strong protectionist lobby within the US

'What needs to be grasped,' Mr Taft says, 'is that access to the European market
is worth the price of opening up our own.'

In his original proposals for removing restrictive procurement practices among
America's allies, the call for collective policies on arms exports to third
countries was something of an afterthought.

However, he now sees a new set of Nato trading rules as a means of supplementing
CoCom, the organisation through which western countries have vetted sales of
militarily-useful products and technologies to members of the Warsaw Pact. The
issue of sales to other destinations is expected to be broached at a high-level
CoCom meeting in Paris later this month.

Some experts believe the Taft initiative could in the longer term lead to a
replacement for the CoCom system, with a shorter list of sensitive items but
with stricter controls and wider application. But even the most optimistic say
it will take time, and still depends on Nato's ability to agree on the first
steps for reforming the arms market.

              TRADE IN CONVENTIONAL ARMS 1985-89 (Dollars bn)
The sellers                             The buyers
1 Soviet Union                66.21     India                 17.35
2 US                          52.86     Iraq                  11.99
3 France                      15.80     Japan                 10.55
4 UK                           7.71     Saudi Arabia           8.76
5 China                        6.86     Syria                  5.88
6 Germany                      5.02     Egypt                  5.80
7 Czechoslovakia               2.66     Czechoslovakia         5.28
8 Italy                        2.08     North Korea            5.28
9 Sweden                       1.88     Spain                  5.15
10 Netherlands                 1.76     Turkey                 4.75
11 Brazil                      1.38     Poland                 4.65
12 Israel                      1.18     Afghanistan            4.61
13 Spain                       1.11     Angola                 3.72
14 Canada                      1.10     Canada                 3.41
15 Egypt                       0.77     Libya                  3.91
Sources: Stockholm International Peace Research Institute and SIPRI
data base


GRAPHIC: Table, no caption; Picture, William Taft, plan for a 'Nato Gatt'

                   Copyright 1991 The Financial Times Limited

                             2507 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 19, 1991, Tuesday

The Gulf War;
US Navy jolted as warships hit mines;
Allied activity increases on Kuwait border

BYLINE: Our Foreign Staff


LENGTH: 393 words

SEVEN sailors were injured yesterday when two US warships hit mines in the
northern Gulf.

US officers would not say if the ships - the amphibious assault vessel USS
Tripoli and the guided-missile cruiser USS Princeton - were part of an armada of
31 ships providing a platform for the expected storming of Kuwaiti beaches.

The Tripoli's hull was holed in the explosion, flooding four compartments. Four
crewmen were hurt, none seriously.

Two hours later, the Princeton, which came to search for two missing sailors
from the Tripoli, hit a mine 10 miles from the damaged ship. The force of the
explosion lifted the ship out of the water and damaged its superstructure
without holing the hull, a US naval officer said.

Three sailors were hurt and were transferred to the British hospital ship HMS

The Princeton cut its engines to half power pending a detailed damage
assessment, but Brig Gen Richard Neal, a US spokesman, said the ship's radar was
still operable and it could fire its missiles.

Brig Gen Neal added the Tripoli was still operating under its own power and was
fully 'mission capable'.

Allied commanders say Iraq has been sowing mines in the northern Gulf over the
last few months to hamper an amphibious assault on occupied Kuwait. Allied
forces had destroyed a total of 86 mines up to Sunday.

Brig Gen Neal said it was unlikely the Iraqis were still laying the devices as
all their mine-laying vessels had been destroyed during allied attacks. 'Any
mines we're going to run into from now until the war ends were probably dumped
in the last three or four months,' he said.

Cloudy weather has hampered allied air operations, but the US-led multinational
alliance continues to threaten Iraq with an imminent onslaught to force it out
of Kuwait.

The border seems to have become particularly active in recent days, although a
US spokesman insisted yesterday that allied ground forces were 'basically'
staying on the Saudi side of the border.

A US officer said that air attacks on Iraqi tanks and artillery in the Kuwait
area were as successful as ever following the adoption of new tactics by the
alliance - including different munitions and better identification procedures.

'We're not experiencing too many misses. We're really having a field day taking
out his (President Saddam's) tanks and his artillery,' he said.


GRAPHIC: Picture, no caption

                   Copyright 1991 The Financial Times Limited

                             2508 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 19, 1991, Tuesday

Station Bombings;
Further blow for ailing air industry



LENGTH: 358 words

THE BOMBS at two London railway stations yesterday are expected to aggravate the
difficulties faced by UK airports and airlines already wrestling with a sharp
decline in passenger traffic because of the Gulf war, terrorist threats and the
impact of the recession.

International air traffic is 15-20 per cent down on the same period last year.
Passenger traffic at BAA airports, Britain's leading airport operator, fell by
17 per cent in the first four days of the Gulf war; and traffic at Heathrow is
22 per cent lower than the same time last year, and at Gatwick 18.5 per cent

On a three-quarters empty flight from Tokyo to Gatwick last week, a Japanese air
hostess asked whether it was safe to go into London to shop. The mortar attack
on Downing Street had led to a number of last minute cancellations.

A study on the effects of terrorism on airline traffic by Mr Chris Tarry and Mr
Peter Bergius, aviation analysts at Kleinwort Benson Securities, shows that it
took between six to nine months for traffic, particularly on North American
services, to recover after the US bombing of Libya and the Chernobyl nuclear
accident in 1986. The number of passengers flying from London to New York
dropped from 2.3m in 1985 to 2m in 1986, while Paris-New York and Frankfurt-New
York reported similar drops.

Traffic bounced back the following year to 2.3m passengers on the London-New
York route and 2.4m in 1988.

The Kleinwort Benson analysts do not expect a similar rapid recovery this time
for the following reasons:he Gulf war is more serious than the US attack on
Libya and the anticipated terrorist response is therefore greater.

The reaction of many companies to discourage business air travel did not occur
in 1986. The airline industry is now in the first year of a traffic slowdown. In
1986 there was a strong underlying traffic trend which enabled traffic to
recover quickly in 1987.

The bombing of Libya and Chernobyl mainly affected North Atlantic traffic. This
time, European traffic and Asia-Pacific routes have also suffered .

The weak dollar is expected to make a recovery on North Atlantic flights more


                   Copyright 1991 The Financial Times Limited

                             2509 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 16, 1991, Saturday

The Gulf War;
Generals on a mission for old glory



LENGTH: 1949 words

HIGHLIGHT: The Gulf strategy of Colin Powell and his commanders has been shaped
by the memory of US humiliation in Vietnam, writes Lionel Barber

FLANKED by four military bodyguards in civilian clothes, each carrying an AF-15
assault rifle, General Norman Schwarzkopf comes barrelling through the Saudi
desert like an M-1 tank.

As he fires off morale-boosting salvoes, the commander-in-chief of allied forces
removes his sunglasses, and offers a steely smile to the waiting TV cameras. At
56, Schwarzkopf has become a celebrity.

Six months ago, after a life-time in the US army, 'Stormin' Norman' was
preparing for retirement in Tampa, Florida, with his wife, three children, and
pet python. Hours after Iraq invaded Kuwait, he was briefing President Bush on a
military response; in less than two weeks he was in Riyadh in charge of
Operation Desert Shield. Now after 30 days' bombardment, the enemy shows some
signs of cracking.

Iraq's offer yesterday to withdraw from Kuwait seemed for a while to bring the
US-led coalition within reach of a famous victory, achieved with high technology
and low allied casualties by a battle plan largely devised by Schwarzkopf. The
plan depended on two crucial lessons learned from Vietnam:to deploy the full
weight of US military power, and to minimise political interference.

Perhaps President Saddam Hussein is wavering at last, although his attempt
yesterday to link a retreat from Kuwait with a withdrawal of Israel from the
occupied territories seemed more like yet another propaganda ploy, or a ruse of
war. Whether he retreats or not, a complete resolution of the conflict may
require his removal from power.

But these are political questions for President George Bush. The US military
must deal with more practical issues such as the how and when of an eventual
Iraqi retreat. If this can be achieved, General Schwarzkopf may rank alongside
Dwight Eisenhower, Ulysses S. Grant, the famed Union commander in the Civil War
who became President, and George Patton as one of the great US field commanders
in history - in stark contrast with William Westmoreland, the Vietnam veteran,
who became a focus of national shame and military failure.

The next phase of the war is likely to prove a turning point for the collective
reputation of the US high command. The Gulf war offered the first serious test
of American generalship since the debacle in Indochina. The generals' goal has
been to ensure that this time they could fight on their own terms, without being
second guessed by the White House.

The men running this vast military machine are a new intellectual breed, with a
common legacy. The Gulf generals, all in their early 50s, were young lieutenants
and majors in Vietnam. Men such as Major General Barry McCaffrey, commanding the
24th infantry, who was hit three times and had most of his right arm blown away.
Another, Lt Gen Frederick Franks, commanding officer in charge of the Seventh
Army Corps, lost most of his right leg.

Lt Gen Bradley Hosmer, inspector general of the US Air Force in Washington, flew
more than 160 combat missions attached to the 1st Air Cavalry Division in
Vietnam. 'There was never any indication that we (the US) were serious about
that war on a political level, meaning a commitment to paying for it, to
describing its purposes or its objectives,' he says.

In a recent interview Schwarzkopf strongly criticised the gradual build-up of
forces by Westmoreland, the army field commander in Vietnam. 'I can still
remember him saying 'The light is at the end of the tunnel, just give me a
hundred thousand more,' and then he got a hundred thousand more and he said,
'the light is at the end of the tunnel, all I need is a hundred thousand more,''
said Schwarzkopf.

In Operation Desert Shield, Schwarzkopf and Colin Powell, chairman of the joint
chiefs of staff, persuaded Bush to give them what they wanted - and more. By the
end of this week, US forces totalled more than 505,000 soldiers, sailors and
airmen; more than 1,800 warplanes and 120 warships, as well as 200,000 allied
troops, spearheaded by a 40,000-strong contingent of British ground forces.
President Bush has remained aloof, allowing his generals to pursue their
campaign within a broad political framework. Bush spend hours on the telephone -
but to other world leaders, not to the field commanders.

General Larry Welch, recently retired as US Air Chief of Staff, says the lack of
political interference from Washington is crucial to the success, so far, of the
Gulf war. 'Every captain in Vietnam knew he was doing things every day that did
not make any goddam military sense. President Lyndon Johnson used to boast that
no North Vietnamese target was hit without his approval - and that was true.'

Welch recalls flying an F-4 interceptor on a bombing mission over Haiphong; it
was the wrong plane, carrying the wrong payload, unable to strike the right
targets. 'We did not provide the troops with the quality of equipment that our
society was capable of producing,' says Welch, who now heads the Virginia-based
Institute of Defence Analysis, 'There has been an intense effort to correct

For all its undisputed waste, the Reagan (and late Carter administration)
rearmament programme helped to develop and manufacture the kind of weapons being
used to such devastating effect against Iraq:the F-117-A Stealth fighter, the
Tomahawk cruise missile and the latest F-15 bombers which, in one sortie, can
deliver the same size payload as a squadron of World War II bombers.

The senior commanders among the 1,088 generals and admirals in the 1.7m - strong
US armed forces can be divided into three rough groups. First, the 'thinkers'
such as General Lee Butler, commander of the Strategic Air Command in charge of
the nuclear deterrent, a graduate in international affairs at the University of
Paris and the man who helped mastermind the post-Cold War re-organisation of US
forces; second, the 'warriors', such as Marine Commandant Al Gray, who strides
around Washington in battle-fatigues; and third, the 'politicos' such as Powell,
national security adviser to President Reagan, and the first black to rise to
chairman of the Joint Chiefs, the highest ranking military post.

Broad generalisations are, however, misleading. Powell, aged 53, has extensive
field experience in Europe, South East Asia and the US, which helped to catapult
him to the top. General Schwarzkopf, nicknamed 'the Bear', appears to epitomise
the fighting general, but he loves ballet, speaks French and German and has a
degree in guided missile engineering.

The modern US general is a lot more rounded than his predecessors; as much a
manager of resources as a leader of men. Strip off their uniforms and some of
the US commanders in Saudi Arabia might pass for corporate executives.

'These people are articulate, bright and career-oriented,' says Martin Binkin, a
retired Air Force colonel at the Brookings Institution. 'The American public is
being introduced to a cast of characters in the Gulf war who do not fit the
stereotypical image of military leaders as cigar-chewing crazies from Dr

'It is not enough to be a bulldog,' agrees Eugene Rostow, a guiding force in
national security affairs from the Truman to the Reagan administrations who
later lectured at the National Defence University in Washington DC, the
classroom attended by the military's best and brightest officers.

More than 40 years ago, George Kennan arrived at the National Defence University
to write his thesis on the containment of Soviet power, the cornerstone of US
foreign policy for almost half a century. Today, the university's war college is
preparing the next generation with a mixture of political science, military
doctrine and public diplomacy.

Most of the students are battalion-size commanders; many arrive with a hostile
attitude to the US Congress and the US press, says Professor Al Pierce, a former
NBC news Pentagon correspondent who teaches military strategy.

'I start by saying we can all agree that the Soviets are Public Enemy Number
Three, but I end up pointing out that if you have got a problem with the press,
you've got a problem with the Founding Fathers.'

Far from inculcating a Prussian-style discipline, the aim is to encourage
flexible thinking and broaden horizons. A few years ago, Petra Kelly, the
anti-nuclear Green politician from Germany, was invited to give a lecture; so
too were representatives of the Catholic bishops.

The students' diversity reinforces the conclusion that, however large the US
military may be, there is little evidence of a homogeneous officer corps. This
should not come as surprise, since the existence of a standing army in the US is
a relatively recent phenomenon, a product of the Cold War and the creation of a
national security establishment under President Truman in 1947. But other
factors are at work, too.

In Britain, institutions such as Sandhurst often recruit candidates whose
families are steeped in the military tradition. But in the US, fewer than 20 per
cent of male (and female) officers are second generation; General Schwarzkopf, a
West Point cadet whose father was a brigadier general, is an exception. Class
considerations count for less in the US. The individual service academies in the
US, while still prestigious, have declined in influence,not least because rival
organisations have competed to supply officers.

Many of today's (and tomorrow's) military leaders come from the universities,
both public and private, through a programme known as the Reserve Officer
Training Corps. The scheme provides Federal government financing for a college
degree, at the end of which candidates serve between four and five years in the
army, navy, air force or marine corps.

Although the importance of ROTC may itself decline and service academies
increase as a result of the planned shrinkage in US forces in the '90s, the
programme underlines how the US armed services continue to be a vehicle for
upward social mobility. Blacks, who number almost a third of the total US force
in Saudi Arabia, still view the military as a route to acquiring skills and
status which often proves elusive in civilian society. General Powell, the son
of Jamaican immigrants who grew up in the Bronx, New York, is the paradigm.

It was Powell and Schwarzkopf who put together the air, land and sea battle plan
to end the occupation of Kuwait. The aim was to use air power progressively to
destroy Iraq's military machine. Starting with the obliteration of Iraq's
nuclear, chemical and biological weapons factories, US and allied warplanes then
sought to sever the supply lines to the 500,000-strong Iraqi army.

'First we are going to cut it off. Then we are going to kill it,' said Powell at
the beginning of the war.

Instead of the gradual escalation of Vietnam, the US has applied the doctrine of
invincible force. Within two weeks, the allies claimed air superiority. In less
than three weeks, they had wiped out Iraq's sea forces. The emphasis has been on
conserving the land forces, not just to reduce casualties, but also to wait to
deliver the final knock-out punch.

The American high command may therefore be re-discovering the art of campaign
warfare which, Hosmer says, was temporarily lost when the US became preoccupied
with the atomic bomb and the bi-polar threat represented by the Soviet Union
after World War II.

Desert Storm is the first overseas operation which shifts the defensive doctrine
of containment of Soviet power towards a new, bolder offensive US military
posture which is far more ambitious than the limited engagements such as the
invasions of Panama and Grenada, or the bombing of Libya. It is may not amount
to outright interventionism, but it is, as Hosmer concedes, 'a first toe in the


GRAPHIC: Illustration, Victors and vanquished (clockwise from left),
ColinPowell, Dwight D. Eisenhower, Ulysses S. Grant and William Westmoreland

                   Copyright 1991 The Financial Times Limited

                             2510 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 14, 1991, Thursday

The Gulf War;
Allies face fallout from Baghdad blast

BYLINE: DAVID WHITE, Defence Correspondent


LENGTH: 523 words

NEWS OF the carnage in a bombed Baghdad air raid shelter could hardly have come
at a worse time for the US and its allies, in terms of its impact on Arab and
world opinion.

It follows closely on this week's signals from Washington that the four-week-old
bombing campaign will be prolonged before any attempt is made to use ground
troops to oust Iraqi forces from Kuwait. At the same time, allied claims that
raids are restricted to targets of military significance are being increasingly
called into question.

The Iraqi authorities, while highlighting what they claim as evidence of attacks
on civilian buildings, had until recently played down the number of casualties.
It was not until this week that they started to speak in terms of thousands -
6,000 to 7,000 - rather than hundreds.

Previous Iraqi evidence of civilians being killed or wounded has been difficult
to verify. An attack on a bridge at Al-Nisiriya in southern Iraq last week was
said to have killed 47 civilians and injured 102, the largest toll in a single
incident so far in the war. But a British cameraman who filmed the casualties in
hospital said later that a number were soldiers.

Information on Iraqi military casualties has been lacking, with no credible
figures from either side to match the extent of allied attacks on installations
and equipment.

The US and its allies have emphasised from the outset of their offensive that
attacks are aimed only at strategic and military targets. This definition
embraces civilian facilities such as power stations, which the army relies on to
keep its command and control operating.

Allied commanders have claimed that their policy has been followed with
unprecedented rigour, pointing out instances in which whole groups of aircraft
have returned to base without dropping their armaments as they could not
identify their assigned military targets.

However, they have admitted it is impossible to avoid civilian casualties.

US experts recognise that precision weapons such as laser-guided bombs do not
always hit their targets, as their guidance systems can malfunction or be
disrupted - for instance by cloud. The US raid against Libya in 1986 showed up
the possible failings of attempted precision attacks.

But the US Central Command made clear that the reinforced structure in Baghdad
was 'struck as designated' and that in purely military terms 'nothing went

The signs point to an intelligence failure over the facility's use by civilians.
Brigadier General Richarl Neal, the US briefer, said the structure was built as
an air-raid shelter in 1985 but had been upgraded for use as a military command
and control centre, and the roof had recently been camouflaged.

'We have no explanation at this time, really, why there were civilians in this
bunker,' he said.

Group Captain Niall Irving, a British military spokesman in the Gulf, said if
the report was true it was a 'tragedy' and 'obviously something did go wrong'.

The allies regarded key military headquarters in civilian areas as 'bona fide'
targets. But smaller military units using suburbs as cover would not be
attacked, he said.


GRAPHIC: Picture, Bodies lie under blankets in a Baghdad street yesterdayoutside
the underground shelter in which they died during an air raid

                   Copyright 1991 The Financial Times Limited

                             2511 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 14, 1991, Thursday

The Gulf War;
Spain in Maghreb mission


LENGTH: 72 words

Mr Francisco Fernandez Ordonez, the Spanish foreign minister, travelled to
Mauritania yesterday on the first leg of a potentially tense five-nation tour
that aims to assess growing anti-western sentiment in North Africa and salvage
as much as possible of Spain's relationships with the Maghreb governments.

He will visit Morocco, Algeria, Tunisia and Libya before meeting fellow EC
foreign ministers in Luxembourg next Tuesday.


                   Copyright 1991 The Financial Times Limited

                             2512 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 9, 1991, Saturday

The Gulf War;
EC prepares post-war plan for Middle East



LENGTH: 658 words

THE European Community hopes to put forward a plan embracing peace, security and
the economy in the Middle East to Arab and Israeli counterparts later this
month, Mr Jacques Poos, the Luxembourg president of the Community, said

Foreign ministers of the 12 EC states will thrash out the proposals on February
19. But Mr Poos said that Mr Yassir Arafat, leader of the Palestine Liberation
Organisation had made 'all official contact' difficult because of his backing
for President Saddam Hussein of Iraq.

The comments by Mr Poos came in a French newspaper interview yesterday after
political directors of the Twelve had met on Thursday to consider European
Commission proposals for a European initiative for the Middle East.

There were indications that the Community would be ready to co-operate with the
US on American proposals revealed earlier this week for a new Gulf security
system and regional economic reconstruction after the war, including the setting
up of a development bank for the Middle East.

Mr Poos, the foreign minister of Luxembourg, which currently chairs EC
discussions, has invited Mr James Baker, the US secretary of state, to Europe as
soon as possible. The EC Commission said yesterday that Mr Baker's suggestion
for a development bank could mesh in easily with Brussels' idea of drumming up
another 'Group of 24' collection of international aid donors, as has been done
for eastern Europe.

US officials are waiting to study the European proposals in detail, but there is
a trace of apprehension in Washington. This goes beyond gentle rivalry to
whether the Europeans will pressure the US to 'deliver Israel' to the bargaining
table in post-war efforts to resolve the Palestinian question.

The Commission is also proposing EC economic accords with Iran, and possibly
with post-war Iraq, as well as normalising diplomatic relations with Libya and
opening an EC office in Saudi Arabia - in addition to existing aid plans for the
Maghreb states of northern Africa, the Gulf and Turkey.

But the Community's desire to help solve the Palestinian issue, highlighted
again yesterday by Brussels giving a further Ecu7.9m (Pounds 6m) aid to
Palestinians in the Israeli-occupied territories, risks a clash with Washington
which does not want the EC to start raising expectations here.

Mr Poos reiterated the Community's long-standing position that the Palestinians
have a right to self-determination. The EC has also long endorsed an
international peace conference on the Palestinian issue. But an EC diplomat said
this week the Community did not want 'to trap itself into a single idea'. He
forecast that if an Israeli boycott rendered such a conference useless, the EC
would be ready to back more narrowly focused diplomacy, favoured by the US and
Israel in the past.

The US reconstruction plans outlined by Mr James Baker, US Secretary of State,
include the creation of a multinational Middle East development bank, similar to
the bank set up to help eastern European countries.

The Gulf states would take the lead in funding the new institution, one of whose
aims would be to redress the enormous economic inequalities between oil-rich
states such as Saudi Arabia and Kuwait and the poorer ones.

Separately, Congress is registering concern about whether the US would
contribute to a multinational bank which in turn would fund countries such as
Syria, still designated as a state sponsor of terrorism.

Jordan, hard hit by the UN embargo against Iraq, remains a problem because of
its pro-Baghdad stance. Saudi Arabia refuses to contribute financial aid, while
the US this week announced it was reviewing all of its economic aid because of
an inflammatory speech by King Hussein which appeared to abandon Jordanian
neutrality in the war. Yesterday, the White House said the king had clearly
aligned his country with Iraq and accused him of aiding Iraqi attempts to
inflame Arab opinion against the US.


GRAPHIC: Picture, no caption; Picture, A damaged Iraqi armoured personnel
carrier is removed bySaudi troops with a forklift truck after last week's
fighting at Khafji

                   Copyright 1991 The Financial Times Limited

                             2513 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 9, 1991, Saturday

A year for paella and chips



LENGTH: 1239 words

HIGHLIGHT: Which holiday destinations are safe? David Churchill answers your

How safe is it to go on holiday this year?

MANY POPULAR Mediterranean destinations are well outside the area of Gulf
conflict - countries such as Spain, Portugal, Yugoslavia and Greece. The risk,
however, lies in potential terrorist action and that probably depends on how the
war turns out.

It is the same with long-haul flights: the potential threat of another Lockerbie
disaster is there, although increased airline security, such as that introduced
by British Airways this week, is reputedly minimising the risks.

Which countries shouldn't I travel to?

The Foreign Office has advised British citizens not to travel to the following
countries:Algeria, Bahrain, Bangladesh, Burkina Faso, Egypt, Iran, Iraq, Israel,
Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Nigeria, Pakistan,
Philippines, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, Turkey (south-east),
United Arab Emirates, Yemen.

In London the Foreign Office has a freephone number, 0800-468646, with recorded
updates of the list.

Cyprus has not been deemed unsafe by the FO, though most big tour operators have
cancelled Cyprus holidays. Several independent tour operators still accept

What happens if my holiday is cancelled by the tour operator?

If the operator cancels your holiday because it thinks it unsafe (as many did
with Cyprus), you will get a full refund. Operators are monitoring developments
in the Gulf but are generally only taking decisions to cancel about a month
ahead, rather than cancelling all summer bookings.

What happens if I want to cancel because my family are worried?

If you cancel you are liable for the cancellation charge as laid down by the
operator in its brochure. Generally, the closer to departure you cancel, the
more you have to pay. If you holiday destination is on the FO's 'unsafe' list,
it might be better to wait for the operator to cancel nearer the departure date
so that you avoid this charge.

Could I change my holiday destination instead?

By and large - yes. If you feel happier choosing a different destination, most
operators will let you make an alternative booking so long as it is with the
same company. Normally operators charge an amendment fee to cover

However, some operators are letting customers change their bookings from
'unsafe' destinations - even if they are for holidays several months ahead - to
other holidays and waiving the fee.

Will my insurance cover me?

Most travel insurance excludes any liability resulting from war and terrorist
attacks if they are attributable to war. Top-up policies can usually be arranged
through your travel agent to cover war risks.

I understand that the travel trade is suffering badly from the war and
recession. What happens if my travel company goes bust?

There is a real possibility of travel agents and tour operators falling on very
hard times this year. Size alone is no guarantee of survival:big companies may
be just as vulnerable to high interest rates and lower demand.

The safest course is still to book with an operator or agent that has lodged a
bond with the Association of British Travel Agents (ABTA) which guarantees the
return of your money if the company goes out of business. While all ABTA tour
operators must have bonds, not all travel agents needed to in the past.
Following last year's collapse of the unbonded Exchange Travel, ABTA says all
agents will be covered within the next month.

Specialist tour operators that are not ABTA members have also organised a
bonding system through the Association of Independent Tour Operators. Check that
your operator or agent is bonded before booking.

If I delay booking, will I get a better deal?

Probably not. Tour operators will have to decide later this month how much
capacity they think they can sell in the summer. This time last year they cut
capacity by 20 per cent rather than be left with unsold summer holidays which
they would have had to sell at giveaway prices. The strategy worked and is
likely to be repeated this year with at least another 20 per cent cut in the
number of packages on offer.

If demand picks up, there could be a shortage of peak-period holidays. Package
deals will still be available but choice will be limited.

What about special deals from travel agents?

Big multiple agents such as Thomas Cook, Lunn Poly and Pickfords are still
offering discounts on holidays booked through them (virtually unheard of at this
time of year). Because of their investment in shops and facilities they need
high-volume business to stay profitable - hence the discounts. Their belief is
that even in a smaller market they can win extra business at the expense of
smaller agents.

Obviously, if you know exactly which holiday you want it makes sense to book
through a major multiple and get the discounts. On the other hand, small travel
agents are worth using if they can offer better service and advice than a chain.
Many small agents do offer this and have a loyal clientele, so it is worth
asking your friends for recommendations.

Would independent travel be better than taking a package this year?

Even before the Gulf war, more people were making their own holiday
arrangements. Cross-channel ferries are likely to be heavily booked in the peak
season, although so far there is still plenty of capacity. Seat-only charter
flights, however, may be in short supply if, as seems likely, one or more
charter airlines is forced out of business before the summer.

Are there any special deals currently on offer?

Now is certainly a good time to travel if you have the money and are prepared to
take a very small risk. Most scheduled airlines have plenty of seats but are
loathe simply to give them away.

Specialist travel agents that offer discounted air tickets are reportedly
dropping prices to customers, although they are not advertising the fact.
Similarly, many top-grade hotels - especially in London and other major cities -
are prepared to do deals to fill up empty rooms. It really comes down to how
much you want to haggle.

By the spring, many airlines may launch special promotions to win back business
and these may be worth waiting for.

What about holidays in Britain?

Even before the Gulf war, UK holidays were expected to do well this year because
of the recession. If the conflict continues for some time, many more Britons may
stay at home for their holidays; at present there is plenty of capacity at
seaside resorts and holiday centres, although places like Butlins and Centre
Parc are filling fast.

What happens if the war lasts longer than expected?

The effect on the travel trade would be devasting, with many companies going out
of business.

Florida, the most popular long-haul destination for Britons, is already
suffering a down-turn and is likely to continue to do so if the terrorist threat
persists. Spain, though, is already certain to have a very good year and will
probably continue to be seen as the safest place for a short-haul sunshine

In summary: try to avoid cancellation charges; check your insurance cover; check
that your operator or agent is bonded (very small travel companies can be
excellent - but the risk is yours); don't count on significant discounts if you
delay your booking; peak-period package choices may be quite limited; if you can
handle the indignity, haggle mightily - especially with hotels and particularly
with luxury ones; learn to love paella.


GRAPHIC: Picture, A Madrid tapas bar, Spain is certain to be popular againwith
short-haul travellers

                   Copyright 1991 The Financial Times Limited

                             2514 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            February 8, 1991, Friday

The Downing Street Mortar Attack;
Incidents increase in spite of high security - Global Terrorism



LENGTH: 535 words

TERRORIST GROUPS across Europe have launched a growing number of attacks in the
three weeks since the Gulf war began.

Yesterday, in addition to the IRA mortar bomb attack on Downing Street, a US
customs official was shot dead at his home near the Incirlik airbase in southern
Turkey. Dev Sol, a revolutionary left-wing group, claimed responsibility.

There have been more than a dozen serious terrorist incidents in Europe since
the outbreak of the Gulf war. Not all the groups involved have proven links with
President Saddam Hussein, but many seem to have taken advantage of the current
crisis to launch an intensified series of attacks.

The most recent events follow renewed broadcasts of a series of cryptic messages
on Baghdad radio last Tuesday, calling on groups to attack western targets.

In the past week Turkey and Greece have continued to be subject to explosions at
commercial and diplomatic addresses. Outside Europe, there have been attempted
incidents across the world, but the discovery of pipe bombs near chemical tanks
at the US naval base at Norfolk, Virginia, on Monday was the only incident of
note in the US.

The growing number of incidents comes in spite of increased security since the
beginning of the Gulf war.

In France, extra security measures have been in place since January 17 when Mr
Michel Rocard, the prime minister, ordered the police and gendarmerie on to
reinforced alert under the Vigipirate security plan established in 1978.
Yesterday, patrols of CRS riot policemen appeared to be stepped up again in

However as the anti-terrorist squad began searching for the group which carried
out yesterday's Downing Street attack it was taking pains to stress its
conviction that the attack was the work of the IRA, with no Arab links.

Defence experts said they expected the IRA to claim the attack before it could
be confused with any possible terrorist action by organisations responding to
Iraq's call for sympathisers to hit back at western Governments in their own

Mr David Capitanchick, a lecturer in politics at Aberdeen University, who has
carried out studies of terrorist organisations, said that any link between the
attack and groups sympathetic to Iraq could seriously damage the IRA's cause in
the eyes of Americans.

'I cannot believe that it is in the IRA's interests to get involved in the Gulf
conflict because their support in the US has been strong, particularly among the
sort of patriotic Americans who would be backing their country in the Gulf,' he

Mr Ian Geldard, editor of Conflict International, a magazine specialising in the
study of terrorist incidents, said that the length of time needed to organise
such an attack could have meant that it was being planned before the invasion of
Kuwait in August.

This possibility was given credence by the police announcement that the Ford van
used in the attack had been sold in July in London for cash. Mr Geldard
dismissed the notion that the attack could be linked to the activities of other
terrorist organisations. 'The IRA are quite happy to take weapons and explosives
from outside sources such as Libya provided they come without strings attached,'
he said.


                   Copyright 1991 The Financial Times Limited

                             2515 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 7, 1991, Thursday

Libya denies report

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 39 words

Libya dismissed as 'baseless' a report by German television that it was building
a huge underground storage bunker for chemical and nuclear weapons. The report
said the project was being built with help from European specialists.


                   Copyright 1991 The Financial Times Limited

                             2516 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 6, 1991, Wednesday

The Gulf War;
Mideast funds flee to Swiss banks



LENGTH: 107 words

MIDDLE EAST investors moved Dollars 2.3bn into Swiss banks immediately after
Iraq's invasion of Kuwait on August 2, writes William Dullforce in Geneva.

Statistics published yesterday by the Swiss National Bank showed the size of the
capital flight which had earlier been referred to only in general terms by Swiss

The dollar obligations of 137 Swiss banks towards clients in the Middle East,
excluding Egypt and Libya, rose from Dollars 4.4bn at the end of June to Dollars
6.7bn at the end of September.

Bankers said there had been no repetition of the inflow of funds from the Middle
East after the outbreak of war.


                   Copyright 1991 The Financial Times Limited

                             2517 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 6, 1991, Wednesday

Chad-Libyan accord

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 26 words

Former enemies Chad and Libya are to restore air links, in their first formal
accord since Libyan-backed President Idriss Deby took power in December.


                   Copyright 1991 The Financial Times Limited

                             2518 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 5, 1991, Tuesday

Dollars 100m drive to kill off Libyan livestock pest


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 124 words

THE Food and Agriculture Organisation has launched a Dollars 100m campaign to
eradicate the infestation of screwworm flies which is threatening livestock,
wildlife and even humans in Africa.

The infested area runs 300 kilometres along Libya's Mediterranean shore around
the capital, Tripoli, and stretches 100km inland.

Ten million sterile flies were sent from Mexico to Libya at the weekend in an
effort to saturate the area with the flies that will yield no offspring.
Eventually, it is hoped, they will die out.

The pest, never known before outside the Americas, appeared in Libya in 1988,
apparently carried in imported livestock. Despite intensive animal control and
treatment, it afflicted more than 12,000 animals, last year.


                   Copyright 1991 The Financial Times Limited

                             2519 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            February 1, 1991, Friday

The Gulf War;
B-52s to fly from British air base



LENGTH: 397 words

BRITAIN has agreed to let the US Air Force use the Fairford air base in
Gloucestershire for B-52 heavy bombers undertaking missions against Iraq, Mr Tom
King, defence secretary, told the Commons yesterday.

The decision demonstrates the importance allied commanders are giving to a
continued offensive air campaign.

The temporary basing of B-52s at RAF Fairford is bound to create a focus for
protests by anti-war campaigners, if only for the bomber's association with the
Vietnam War.

Mr King emphasised that the move involved 'a limited number' of B-52s, that they
would not carry nuclear weapons, and that they would be used against military
and strategic targets.

He gave a clear indication that air attacks would continue for the time being as
the main thrust of allied operations against Iraq. 'So vast is the Iraqi
military capacity that it is likely to be some time yet before it will be
sufficiently reduced to proceed with the liberation of Kuwait,' he said

US Air Force B-52s are being used for saturation bombing of the Iraqi Republican
Guard in the region of Kuwait's northern border with Iraq.

The eight-engine B-52, an aircraft dating back to the 1950s, has a flying range
of more than 7,500 miles without refuelling.

The US has up to now used Fairford as a base for KC-135 refuelling tankers.
Aircraft from the base played a role in the bombing attacks against Libya in
April 1986.

However, US operations at Fairford are due to be suspended in October under a
programme of cuts.

In his statement, Mr King said operating costs of UK forces in the Gulf had
risen to more than Pounds 4m a day. The full operational costs falling in the
financial year 1990-91 were put at over Pounds 1.25bn, excluding the cost of
replacing equipment and munitions. The number of UK personnel involved has risen
to about 42,000.

US vice-president Dan Quayle was able to cite the deployment of B-52 bombers in
England as evidence of the co-operation between the UK and the US when he
visited London yesterday.

After an hour-long meeting with Mr John Major, prime minister, the two also
claimed the re-taking of the Saudi border town of Khafji was evidence of the
success of the allied forces. But Mr Quayle said there was 'no hurry' to engage
in a ground campaign.

Mr Major confirmed that the B-52s would not be armed with nuclear devices.
Commons statement, Page 8


                   Copyright 1991 The Financial Times Limited

                             2520 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            February 1, 1991, Friday

The Gulf War;
Iran upset by arrival of Iraqi warplanes



LENGTH: 477 words

IRAN YESTERDAY criticised Baghdad over the landing of Iraqi warplanes in Iran
and said they would stay there until the Gulf war was over.

Mr Ali Akbar Velayati, foreign minister, told a visiting Iraqi delegation that
Iran, neutral in the conflict, was unhappy that Baghdad did not get Tehran's
agreement before its military aircraft entered Iran's air space.

His comments, quoted by Irna, the Iranian news agency, were reported as Tehran
became the diplomatic focus of the Gulf war, with the arrival of delegations
from four countries, including Iraq and France.

The Iraqi delegation, headed by Mr Saadoun Hamadi, a deputy prime minister and
former foreign minister, arrived from Baghdad carrying a message from President
Saddam Hussein to President Ali Akbar Rafsanjani.

The talks were the first officially acknowledged contact between Iran and Iraq
since Iraq flew nearly 100 of its aircraft to Iranian bases.

Mr Velayati was said to have reaffirmed Iran's neutral stance on the war and
pledged that the Iraqi aircraft, including some of its most sophisticated attack
jets, would not be returned to Iraq until hostilities had ended. The Iraqi
pilots are said to have been interned.

An assurance of this kind was being sought by the French delegation, headed by
Mr Francois Scheer, secretary-general of the French Foreign Ministry, which was
said to have denied that it was seeking talks with the Iraqi representatives.
France yesterday assured Britain that it was not involved in a separate Gulf
peace initiative.

Mr Scheer recently returned from visits to Algeria, Jordan, Tunisia, Morocco and
Libya, which have all been looking at ways of achieving a Gulf ceasefire. Mr Sid
Ahmed Ghozali, the Algerian foreign minister, was expected in Tehran yesterday
as was a Yemeni deputy foreign minister.

There was speculation overnight in Arab capitals that with Mr Saddam claiming a
big land victory, there might be a brief opportunity when he would listen to
advice to withdraw from Kuwait.

Peter Riddell adds from Washington: The US is arguing that Iraqi pilots who have
flown to Iran should be treated as prisoners of war. This would prevent them
from flying their planes out of Iran and rejoining the conflict.

According to the Pentagon 98 Iraqi aircraft have now been flown to airfields in
Iran. The State Department said yesterday that, under the 1949 Geneva convention
on prisoners of war, a nation that is not a belligerent and which receives onto
its territory armed forces should treat those forces as prisoners of war. Iran
has declared itself a neutral in the conflict.

Such treatment as prisoners of war is, according to the department, 'without
prejudice to more favourable treatment which may be provided in accordance with
the specific terms of the convention. However, they ( the prisoners) may not be
allowed to return to Iraq.'


                   Copyright 1991 The Financial Times Limited

                             2521 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 31, 1991, Thursday

Mubarak in Libya



LENGTH: 54 words

President Hosni Mubarak of Egypt made a surprise trip to Libya yesterday to see
Colonel Muammar Gadaffi, who has recently shown signs of straying from his
neutral stance on the Gulf War, writes David Lennon in Cairo.

Egypt has been working hard since the war began to dissuade other Arab states
from siding with Iraq.


                   Copyright 1991 The Financial Times Limited

                             2522 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 29, 1991, Tuesday

Libyan aircraft released

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 32 words

A Libyan transport aircraft, impounded last week over a suspected breach of
Washington's embargo on trade with Libya, was allowed to leave Belgium at the
weekend, a justice official said.


                   Copyright 1991 The Financial Times Limited

                             2523 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 29, 1991, Tuesday

Libyan aircraft let go

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 32 words

A Libyan transport aircraft impounded last week over a suspected breach of
Washington's embargo on trade with Libya was allowed to leave Belgium at the
weekend, a justice official said.


                   Copyright 1991 The Financial Times Limited

                             2524 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 28, 1991, Monday

Algeria 2;
A two-tier foreign policy - War in the Gulf puts Algerian diplomats on their



LENGTH: 1239 words

THERE are two strands in Algeria's foreign policy. On the international level,
it supports third world liberation movements and the South against the North,
and and undertakes the often thankless task of mediating with hostage takers.

Then there is its Algeria-first position, dealing with its immediate neighbours
and fostering stability in North Africa.

Just when local matters seemed to be in the ascendant, the Kuwait crisis broke
out and President Chadli Bendjedid and Mr Sid Ahmed Ghozali, his foreign
minister, threw themselves into international and inter-Arab efforts to find a

Algeria took a characteristically subtle line over the crisis, which irritated
the Americans and other westerners not fully familiar with its diplomatic track

It first criticised Iraq's invasion and demanded immediate withdrawal of its
forces. It then argued for maintaining contacts with Baghdad in order to
influence Saddam Hussein. 'We are against the isolation of Iraq,' a senior
Algerian diplomat said. 'We must achieve a dialogue. Iraq needs to be helped.'
This enabled Algeria to help obtain the release of foreign hostages from

There was an element of self interest in this. The Algerian government, faced
with its own Islamic resurgence, foresaw that once Saddam Hussein became an Arab
hero or martyr he could stir anti-western violence which might upset Algeria's
plans to attract western investment.

Algeria's record particularly equipped it to broker an Arab solution. Its
eight-year War of Liberation against France gave it impeccable credentials in
the Third World, both among Arab and African nations.

Over the years it also earned western respect by renouncing radicalism even
though its government had remained sternly socialist and centralised.

Its reputation was also softened by its internal political and economic reforms
and the quieter and less ideological approach of President Bendjedid towards
international affairs. This facilitated closer relations with France and the
European Community and, above all, the other countries of the Maghreb.

Simultaneously, events in eastern Europe have virtually eliminated what used to
be a key plank of Algeria's foreign policy, its links with the communist world.

They have also been echoed by events in Algeria itself, which have shaken the
position of its former single party, the FLN.

Algeria fears that the changes in eastern Europe may reduce the west's interest
in the Middle East and in developing countries as a whole.It has therefore begun
to seek a new balance, the nature of which will depend on the outcome of the war
in the Gulf.

The Front Islamique du Salut (Fis), which might win a majority at the next
general elections, came out strongly this month in favour of Saddam Hussein.
Previously, it had not shown its hand on foreign policy beyond a pledge to
assert Algerian prestige and moderation and to operate within an Islamic
framework. All that can be said is that, if it follows the precedent of previous
governments, a Fis regime would conduct foreign policies with considerably more
skill than internal affairs.

Meanwhile, as elsewhere in the Arab world, Algeria believes that regional
groupings may be more effective than pan-Arab structures such as the Arab Common
Market of the Arab League.

Two years ago, the Arab states of the Maghreb set up the Arab Maghreb Union,
consisting of Algeria, Libya, Mauritania, Morocco and Tunisia. It was one of
three regional Arab groupings formed in the 1980s - the others were the Gulf
Co-operation Council set up in May 1981 and the Arab Co-operation Council
(consisting of Iraq, Egypt, Jordan and Yemen) in February 1989.

A prime motive for the UMA's creation was to foster trans-Mediterranean links
and to prepare better for dealings with the European Community when the unified
market comes into operation at the beginning of 1993.

There were also political overtones, symbolised by the similarity between the
French acronym UMA (Union du Maghreb Arabe) and the Arabic word umma (Islamic
nation). On a more practical level, the UMA has helped to rein in Colonel
Muammar Gadafy, Libya's president, from some of his more extravagant political
forays. Besides providing a forum in which the heads of these states can confer,
it offers a glimpse of the economic and political benefits of union.

It promises, for example, to end the bitter 15-year dispute between Algeria and
Morocco over the status of the western Sahara.

The union has its own parliament (Majlis al-Shoura), based in Algiers and
composed of 20 deputies from each country. On January 9, the umma factor came
into play when the UMA took the side of Iraq in the Gulf crisis, and expressed
'solidarity with the Iraqi people in the event of military aggression'.

The UMA has several of the features of other Arab economic unions dating back to
the 1960s. It has a policy-making council of heads of state under an annually
rotating chairman; a council of foreign ministers to prepare summits; a
secretariat to deal with day-to-day administrative problems; and a parliament.

Like the EC, it was designed to boost trade and speed up economic development by
allowing the free movement of goods, people, services and capital - thereby
strengthening its hand in talks with the EC.

The Maghreb countries have strong economic links with the EC, which absorbs
roughly 70 per cent of all its exports. There is also the presence in the EC,
especially France, of large numbers of Maghreb workers, not to mention immigrant
communities. But unlike the EC, there is not much internal trade in the Maghreb.
It amounts to only 1.5 per cent of the UMA countries' official external trade
with one another.

The UMA states vary in size (Algeria is the largest) and in their sources of
income. (Algeria is rich in oil and gas, Morocco in phosphates.) Income and
poverty levels also vary widely, a factor which Such weakens them in bilateral
negotiations with the EC.

Some initial economic moves have been taken. In a series of meetings, the UMA
states have agreed to drop airport passport checks on each others' nationals and
to study the chance of creating of a common customs service and agricultural
market within five years.

Last October, it was decided to establish a joint investment bank and free trade
zone by 1992. Inevitably, these decisions will take time to implement. But the
foundations are being established.

Algeria hopes they will provide a less stressful environment in which to
concentrate on domestic economic development and to ride out crises such as that
in the Gulf.

In the end, it is the political ramifications which Algeria's planners find
intriguing. Colonel Gaddafy, with his sudden demands for hasty union with
neighbours, had been an unsettling force in the Maghreb. Libya's inclusion in
the UMA, it is felt, could restrain Gaddafy's enthusiasm.

Closer ties have been sought with the EC as a whole, but there has also been
more specific sharing of concerns with the EC's southern four states and the
Mediterranean as a whole.

Last October, the UMA members and Italy, France, Spain and Portugal after a
meeting in Rome launched a new exercise in regional co-operation - but only as
an exercise to strengthen EC relations with the Maghreb.

If the Maghreb countries are not destabilised by events in the Gulf, the UMA
could evolve into one of the Arab world's more solid regional groupings.


GRAPHIC: Picture, Ghozali, failed peace bid

                   Copyright 1991 The Financial Times Limited

                             2525 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 28, 1991, Monday

The Gulf War;
Opec head accuses West over glut

BYLINE: DAVID THOMAS, Resources Editor


LENGTH: 497 words

WESTERN industrialised countries were yesterday accused of creating an oil glut
as part of the the war effort against Iraq.

The charge came from Mr Sadek Boussena, Algeria's oil minister and president of
the Organisation of Petroleum-Exporting Countries, on the eve of the first
review of oil supplies since the war began. The review will come from the
International Energy Agency.

The IEA is to meet in Paris today to review its decision to make 2.5m barrels a
day (b/d) available to the markets. The agency's action was, 'when combined with
the euphoria about the duration of the war on the first day, effectively an
announcement that an oil glut could be expected,' Mr Boussena said.

The IEA's action contributed to the record Dollars 8 a barrel drop in the price
of oil immediately after war broke out, because it helped reassure the markets
that oil supplies were secure.

'It has to be said that the IEA, which had until then refused to take any step
to stabilise the market, resolutely took this action from the perspective of
war,' Mr Boussena added. His remarks reflect concern among some Opec members
that oil prices could fall further after the war ends. Extra output by other
Opec members, notably Saudi Arabia, along with the recession in the west, has
more than compensated for loss of Kuwaiti and Iraqi oil to world markets.

IEA observers believe modifications to the 21-nation agency's stance may emerge
at today's meeting. The agency may say actions to limit oil use will not be
needed in the foreseeable future. These were designed to contribute 500,000 b/d
to the IEA's 2.5m-b/d package. Some smaller countries might also back away from
plans to release stocks.

But only a change in position by the US would have much impact, since its
decision to release 1.1m b/d from its huge strategic petroleum reserve was by
far the biggest element in the IEA package.

US officials are expected to confirm details today of the progress of the first
tranche of bids for oil from this reserve, but there is as yet no sign of a US
move to alter the main IEA decision.

The UK Department of Energy, whose top official chairs the IEA's governing
board, said yesterday the IEA consensus was holding firm. The UK is proceeding
with plans to release 120,000 b/d of company-held stocks this week.

1. Mexico, 1979, Ixtoc well blow-out: up to 10.2m barrels.
2. Kuwait, 1991: 6m to 8m barrels, provisional estimate.
3. Iran, 1983. Nowruz blow-out: up to 4.4m bs.
4. S Africa, 1983, Castillo de Bellver tanker fire: up to 1.9m bs.
5. France, 1978, Amoco Cadiz tanker grounded: up to 1.8m bs.
6. Tobago, 1979, tankers collision: 1.2m bs.
7. Libya, 1980, well blow-out: 1m bs.
8. Barbados, 1979, Altantic Empress tanker fire: 988,000 bs.
9. UK, 1967, Torrey Canyon tanker grounded: up to 920,000 bs.
10. Greece, 1980, Irenes Serenade tanker fire: up to 900,000 bs.


                   Copyright 1991 The Financial Times Limited

                             2526 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 28, 1991, Monday

Looking to Europe



LENGTH: 1194 words

HIGHLIGHT: The Mediterranean island of Malta, located between the European and
Arab worlds, has been enjoying economic prosperity with increased exports and
record-breaking levels in tourism. But it is increasingly anxious about the
ramifications of the Gulf crisis, says Richard Evans

MALTA, even more than most other countries, is awaiting the outcome of the Gulf
conflict and its aftermath with fingers nervously crossed. Given its position in
the south Mediterranean between the European and Arab worlds, it has potentially
a lot to lose.

Its economy has been doing well recently with exports up and tourism, the main
industry, breaking all records. It also has high hopes of eventual entry to the
European Community, with the stability and prosperity that should bring.

However, in the short term, with such a tiny economy utterly dependent on oil
and a range of other imports, it is particularly vulnerable to external
political and economic forces.

The general economic recession in the US and much of Europe has so far affected
Malta surprisingly little given its trading pattern, but that could change
rapidly if the Gulf conflict is prolonged.

Such an outcome would be a tragedy, for much has been achieved in Malta in
recent years. After decades of divisive and occasionally violent politics, there
has recently been the development of more mature, less divisive attitudes, and
these are beginning to bring their rewards.

The country that the Nationalist party inherited when it returned to power in
1987 after 16 years in opposition was largely the creation of Mr Dom Mintoff,
the charismatic Labour premier from 1971 to 1984, whose name became synonymous
with Malta because of his high profile, confrontational politics and abrasive

In a series of interventionist moves domestically and an international strategy
of neutrality and non-alignment, he severed Malta from its colonial past. He was
succeeded by his protege, the calm and moderate Dr Carmelo Mifsud Bonnici, who
followed the broad policies laid down by Mr Mintoff, but in a much more
conciliatory style.

The outcome of Labour's years in office was a country dominated economically by
the state, which controlled all utilities, banks and insurance houses, drydocks,
shipyards, broadcasting and telecommunications.

In foreign affairs the non-aligned stance, now cemented into the constitution as
part of an electoral reform deal with the Nationalists before the last election,
resulted in a highly controversial treaty with Libya and close commercial ties
with the Soviet Union and China, as well as with western Europe.

Dr Eddie Fenech-Adami, the Prime Minister and Nationalist leader, has not put
all these policies into reverse since the impressively smooth transfer of power,
despite his pro-western attitudes. He favours the continuation of a neutral,
non-aligned policy and seeks to retain cordial, if more detached, relations with
nearby Libya.

Ultimately, his primary objective is to see Malta become a full member of the
European Community, and a formal submission for entry was tabled last year. The
entry however, given the pre-occupation by the EC with preparations for the 1992
single market, and the prospect of a log-jam of applications from other states.

Similarly on the economic front the main target is Europe, as the bulk of trade
is done with members of the EC, particularly Germany, the UK and Italy. The
government came into power with a mandate to create a more open economy, and a
campaign to persuade industrialists and businessmen of the benefits of investing
in Malta has been launched.

There is a competitive package of incentives in place involving a 10-year tax
holiday for incoming export-orientated companies, ready-built factories at
subsidised rents, and generous training grants.

The task of marketing the island is the responsibility of the Malta Development
Corporation, and the key element in the new strategy is the development of a
network of locally-based contacts in Europe and also in the US. These
intermediaries will help target potential investors and help vet them.

The intention is to attract higher skill industries to Malta, such as
electronics, pharmaceuticals and information technology, to take the place of
more traditional sectors such as textiles, where low-cost competition from north
Africa and Asia is having an adverse impact.

There is also a plan, already being developed, to make Malta an off-shore
financial centre by targetting banks, insurance companies, shipowners, trusts
and trading companies as suitable partners for the island's new role.

Apart from industry and off-shore facilities, there are incentives in place to
attract increased trade to impressive new freeport facilities and for people
taking up permanent residence on Malta or its sister island of Gozo.

For this strategy of developing a more open, high-skill economy to be
successful, the country's neglected infrastructure has had to be improved, and a
big capital programme involving an overhaul of the telecommunications network, a
new power station, a second air terminal, and desalinisation plants, has been
largely completed. What still needs to be completed is the task of persuading
people to change many deeply entrenched attitudes. Over the years the workforce
has come to regard public sector employment as ideal, and the private sector as
too risky and demanding.

Government and state sector workers are frequently under-employed, have little
responsibility and often manage a second job in the flourishing black economy.
All this is changing, but it is a slow process, and Dr Fenech-Adami is anxious
not to create more unemployment and thus inflame political passions.

'We have managed to steer a course that has not provoked confrontation.

'We are after consensus, we are not for changing things over night . . . Malta
is no longer playing maverick politics and prospects for investment are now
good,' he said in an interview in the splendid Parliament building in Valletta.
'We've now reached the stage where we are on the point of seeing a big leap
forward. We've managed in the last three years to eliminate most of the
handicaps that my government inherited . . . my feeling is not that we are
there, but that we are now at the starting point to get things moving.'

The government's plan is two-pronged: To continue to develop the training
programme, launched by Labour, to ensure that Malta has an efficient workforce
to cope with higher demands, and to gradually promote an environment more
favourable to private enterprise culture.

However, there are many elements in Malta that are deeply suspicious of reform
and change, including the Catholic church, which has had frequent conflicts in
the past over social and educational changes.

So far, the tactic of cooling passions and avoiding political confrontation has
worked well. The Nationalists have not always fulfilled their promises as
quickly as they would have hoped, but they have not given the Labour opposition
much at which to aim. In fact, the Labour party and the trade unions have been
remarkably quiescent and have shown no inclination to return to the tradition of
polarised, often violent politics.

If the economy continues to flourish and social cohesion is maintained, there is
every prospect of the Nationalists retaining office at the next election in
1992. But a lot will depend on the outcome of the Gulf crisis.


GRAPHIC: Illustration, no caption; Picture, Malta's capital, Valletta. The
island republic has a superbclimate and an English-speaking workforce

                   Copyright 1991 The Financial Times Limited

                             2527 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 28, 1991, Monday

Malta 4;
Hurdles in the way of early EC membership - Lively debate over Malta's
application to the European Community



LENGTH: 984 words

THE Nationalist government of Mr Eddie Fenech-Adami sees Malta's long-term role
as linked inextricably to Europe, and the whole thrust of foreign policy is
targetted to this end. The ultimate goal is full membership of the European
Community, and this is beginning to dominate the island's politics.

In order to get a place at the head of what could become a lengthy queue, Malta
put in its formal application for membership last July.

Plans are well advanced for all new legislation to be drafted in line with EC
regulations, and for all current laws, taxes and tariffs to be adjusted in

The key questions now are how much support Malta will receive for its
application, how quickly membership can be achieved, and how successfully
internal political and economic opposition can be overcome.

Mr Fenech-Adami, who used EC membership as one of the main planks of his
successful election campaign in 1987, believes that membership would bring great
benefits to Malta.

'The Common Market will prove to be a great incentive, a motivating force and an
inspiration,' he said in an interview in the splendid Parliament building in
Valletta that used to be the seat of the Grand Masters of the Knights of Malta.

Others, including Labour Party leaders and some industrialists and economists,
are not so sure.

They argue that Malta already benefits greatly from its association agreements
with the EC, and fear that the competitive pressures of full membership would
drive many protected industries out of business and result in high unemployment.

With a population of barely 350,000, Malta would be small enough for the
Community to digest with few economic problems, and it could prove a
strategically useful bridgehead to the Arab world - there continue to be close
economic and cultural ties with Libya although politically the Nationalist, or
Christian Democratic, government has adopted a much more detached policy
compared with the previous Labour administration.

There are hurdles in the way of early membership, however. Malta's application
follows those of Austria, Turkey and Cyprus, and a flood of fresh applications
could follow from Efta countries as well as the former communist states of
eastern Europe.

The foreign ministers of the 12 member-states have formally taken note of the
application and have asked the commission to prepare a report on the issues
raised by Malta's membership request.

The difficulty for the EC is not just the number of requests for membership, but
the approach of 1992, when the single European market will have been largely

Because of the need to concentrate on this primary task, no detailed membership
negotiations, for Malta or anyone else, are likely before 1993.

The Community's desire to stall has as much to do with its institutional
structure as with its economic and strategic aspirations, however.

Even the addition of a state as small as Malta would mean more meetings, more
documentation and more bureaucracy - for which Brussels is far from sure it has
the energy or the appetite.

While it is busy with 1992 economic and monetary union and institutional reform,
the EC does not want to be diverted by enlargement.

The Commission is therefore likely to conclude that new applications should not
be considered before 1993 at the earliest.

However, Malta hopes that the EC's southernmost states, Italy, Greece, Spain and
Portugal, which are the most favourable to the application, plus the UK with its
close economic and historic ties, will press the Commission to produce an
encouraging report so that preparatory work can be well advanced by 1993.

The task of planning economic and political integration and industrial
harmonisation has already started in Valletta with the setting up of a small EC

One of the main tasks, apart from preparing harmonisation legislation, is to
help the vulnerable industries that have been protected from outside competition
by a very centralised, state orientated economy with high tariff barriers.

Under the three association agreements that have been signed with the Community
starting in 1971 and continuing until October, 1993, Malta has benefitted
greatly from increased trade. Around 75 per cent of its trade is now with EC

What is already clear, however, is that Malta would be an even greater
beneficiary from EC structural funds following membership. As things stand, it
is estimated that Malta would contribute LM 10m to LM11m annually, but would
receive LM30m in return. There would also be the prospect of tapping various
other EC funds.

The long haul to full membership started in 1979 when the Nationalist Party
declared in its election manifesto that EC membership was one of its principal

This was repeated in subsequent manifestos, including that of 1987, when the
Nationalists returned to power.

The main arguments have been as much political as economic, as following the
neutralist and often anti-Western stance of the former Labour administration,
the Nationalists believe that the EC would provide Malta with a firm and
permanent anchorage and that membership would contribute to the stability of the

In the short-term there would clearly be some drawbacks, particularly for those
industries that have been over-protected in the past and which fail to modernise
to international competitive standards within the transition period.

This is a prospect that worries the Labour Party, which started from a very
hostile stance but now favours closer links with the EC rather than full

The Malta government's hope is that although formal negotiations are unlikely to
start before 1993 because of other EC pre-occupations, they could then be
concluded rapidly given careful preparation.

The target is for transitional arrangements to start in 1994-95 and for full
membership to be achieved around 2005.


                   Copyright 1991 The Financial Times Limited

                             2528 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 28, 1991, Monday

Malta 4;
Big surge in imports - International Trade



LENGTH: 1102 words

IMPORTS into Malta are booming as the draconian restrictions, imposed by
previous socialist administrations, continue to collapse.

Even after the rush of Christmas trade was over, the island's fabled Grand
Harbour was still busy with shipping bringing in industrial and development
products, food and luxury goods - mostly from Western Europe, the island's major
trading partner.

Shops are now bulging with a spectacular array of products which for years were
once banned from the island, including British chocolate, Italian clothes,
luxury and electronic goods manufucutured in the US and the East Asia.

In 1989, the Maltese snapped up close to Lm43m worth of imported food, an
increase of LM9m over the 1987 figure; this, in addition to Lm56.3m worth of
cars, colour television set, domestic appliances, household goods and other
durables (Lm11m more than was purchased in 1987).

Proportionately more money is spent each year on consumer goods than on
industrial supplies or capital requirements. If the current buying frenzy
continues - as it must - the threat is that it will eventually tax the resources
of the Exchequer, unless this in turn begins to generate a considerable amount
of industrial and commercial wealth.

Imports are also helping to upgrade a creaking infrastructure, thus bringing the
island closer to the 21st century; and the Maltese are meanwhile sampling the
benefits of an overhauled standard of living.

It was inevitable, after taking over the government in 1987, for Premier Fenech
Adami, a quintissential European and a standard-bearer of free trade, to
dismantle the barriers which successive socialist administrations had installed,
seemingly to weaken trading ties with Western Europe.

The application of stringent trade practices to curb trade deficits had long
lost its appeal, even before the socialists lost power. The effect was to
stultify Malta's potential for growth whilst development slowed down.

The strategy of limiting trade to countries that would provide Malta with a
healthy trade balance, along with others that agreed to barter goods and
services, and those willing to balance the books by granting the Maltese
economic aid packages, failed to deliver Malta from the predicament of trade

This was more evident when trading problems were tackled from a political,
rather than from a commercial standpoint, forcing Malta's major trading partners
to lock their horns with those of the island's former socialist premier, Mr Dom
Mintoff. Neither were efforts to hand over Malta's orders for development and
consumer needs to Third World and East European countries particularly
successful. Often Malta's new-found trading allies were more keen to sell than
buy, with the exception of Libya.

The resort to punitive political moves later produced even less spectacular
results. An outright ban slapped on Japanese imports - when Japan, then showing
an annual Lm17m trade surplus refused to redress the imbalance - served only to
shift orders to Italy.

Eventually, Italy, too, was faced with a trade ban after Maltese demands for
compensation were viewed as 'excessive.' Britain steered clear from being caught
up in a similar argument, by keeping its hefty contribution to the island's
tourist industry and Malta's shiprepair yards running at a high level.

Few countries, however, escaped Mr Mintoff's search for offenders. The Soviet
Union twice put its hand to countertrade accords, even though originally the
deals appeared slanted in Malta's favour. Sadly, the second accord, which
covered the construction of eight ships by Maltese shipbuilding yards, was to
cost the island dear. As the US dollar plummetted, the deal left Maltese
shipbuilding yards with huge financial losses.

A third protocol, signed in the new year, is now set to achieve more rational
trading goals, although finding adequate hard currency to pay for Malta-made
goods, including textiles, footwear and processed foods, remains a problem - the
Soviet Union still owes Maltese companies LM1.8m from last year. The
liberalisation of trade has brought a number of positive changes for Malta's
trading community, their principals abroad and for consumers. As trade barriers
were lifted, a number of socialist 'sacred cows' were swiftly slaughtered on the
altar of free trade which is now an abiding principle on the island.

The import of essential commodities has been handed back by the state to the
private sector; market mechanisms which dictate the price of goods, have been
revived; the practice of the government pegging wages, in line with the price
movement of state-imported essential commodities, has been abandoned ; employers
and unions are once more leading players in indexing wages as prices rise.

Still, Malta's experience in throwing wide open the floodgates of free trade has
brought mixed results in its wake, ranging from the dumping of goods by foreign
suppliers to the spawning of healthy competition, from seeing government
controls receed to having to cope with a rising cost of living.

Given Malta's wide open economy, trade gaps are a cross which the Maltese must
bear - more so as the need for development heightens. Capital goods last year
accounted for 44 per cent of imports, reflecting a surge in expenditure by the
government and the private sector. Another 55 per cent covered the importation
of industrial supplies, including materials for Malta's semi-conductor industry.

The task facing Fenech Adami's administration is to ensure that the distortions
created by hefty imports, including a bout of inflation that is gradually
heading towards prevailing interest rates, will level out as early as possible.

The spin-off from Malta's rising imports bill, which by September last year
reached Lm447.6m, should have by now created more industrial and social wealth
than is visible. Trade deficits will begin to assume a less disconcerting
perspective when they, in turn, brought the island increased benefits in income
as well as jobs.

So far, only the wholesale and retail trades appear to have stepped up their
contribution. Fortunately, perhaps, the bulk of the bill is run up with EC
countries. These, by September last year had placed Lm200m worth of orders for
Malta-made goods against Lm336m worth of sales made to Malta, bringing, in the
process a surplus of Lm137m.

This point is unlikely to be lost on the Maltese. When eventually they sit down
to negotiate their entry into the European Community as full members, the
figures are likely to prove useful in convincing the EC about the island's
economic well-being.


GRAPHIC: Picture, The ramparts of Valletta are dwarfed by the oil tanker,

                   Copyright 1991 The Financial Times Limited

                             2529 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 26, 1991, Saturday

Private View;
A voice of reason to bridge the gulf



LENGTH: 1466 words

HIGHLIGHT: Christian Tyler meets Dr Zaki Badawi, an imam trying to reconcile
British Moslems to a conflict in loyalties

FOR THE two million or so Moslems in Britain, the Gulf war presents a gruesome
version of what Norman Tebbit crudely called the 'cricket test'.

Somehow they must reconcile sympathy for their co-religionists in Iraq with
loyalty to the British crown. If relations between British Moslems and natives
do survive a long war, then one of the first people to get a medal should be Dr
Zaki Badawi.

Badawi, an Egyptian theological scholar and imam, is often described as the
moderate voice of Islam in the UK. It was he who countered the Ayatollah
Khomeini's fatwa (religious opinion) on Salman Rushdie's book with a fatwa of
his own. So it was to him I went for a view of what the Gulf conflict will mean
for Moslems on the home front.

Race relations suffered because of the Rushdie affair, I observed. Was this war
going to send them over the edge?

'It could,' Badawi said, 'if some of the media continue to act foolishly and
irresponsibly:it could create a vision in the mind of the ordinary Briton that
you have a Fifth Column among you, easily identifiable and whose institutions
are very clearly visible.' Reporters, he said, had a duty to find out which
Moslem spokesmen were representative and which were not.

Moslems too, had an obligation. 'Rushdie was one thing. But when a country is
sending its own sons and daughters to face killing on a battlefield, no
community ever can tolerate people that do not show sympathy and understanding
for the troops.

'The country might tolerate the Tony Benns and the Denis Healeys and the Edward
Heaths because their patriotism is not in question. But when you are a
foreigner, if you question a military position then it looks like treason.'

I asked whether Moslems here really believed the west had attacked Iraq to
destroy the holy places.

'Oh yes, totally. That is a very common belief. That is why Saddam, who is a
secular man, just emerged from a war with another Moslem country, suddenly can
don the mantle of a mujahed (holy warrior) and get people to believe him.

'The rhetoric of Bush from the start was not very helpful. His language was
aimed at provoking and humiliating Saddam Hussein, really goading him into
battle. The Press in America tried to present it as a new battle against
fundamentalism - so a man who was fighting a Moslem state yesterday becomes an
Islamic fundamentalist today.'

Do you think the west has got these ulterior motives?

'No, no, no. The west is there for oil, full stop.'

Some of the loudest voices in Moslem Britain live in Bradford, where the
militant Sher Azam has emerged as president of the local council of mosques. But
with the start of the war even these Moslems realised they were treading a
dangerous path, Badawi said, and were urging others to obey the law of the land.

Badawi's advice to his community is to have regard for the lives of all
involved, to protest only in legal ways, and to ignore Saddam's call for jihad
and his incitements to terrorism. He also urges Moslems to demonstrate only in
company with other British anti-war organisations.

It is this emphasis on obedience to the host country's law that marks Badawi out
as a moderate exponent of a religion which for centuries has been seen by
Christendom as alternately lascivious and militant. His moderation derives from
a concern to develop what he calls a 'minority theology', authentic rules for
Moslems living in a non-Moslem country.

He has a council of Islamic law at the college which can grant dispensations to
reconcile the precepts of the Sharia with British law and customs (in matters
such as divorce and mortgages, for example). Yet he resents the label of
moderate because it suggests he is somehow less of a Moslem.

'I have never surrendered anything Islamic at all. I am not saying that Islam
has to make any concessions to anybody. I have respect for other religions,
other societies and traditions and I call upon my community to handle its own
affairs in a legal and sensible fashion. I am dead against a minority attempting
to force or compel a majority because that never works.'

'The difficulty with our community here is there are very few qualified to
speak, or who have knowledge of Islam.' Most of the imams were from poor rural
areas in Asia, he explained. They were first-generation immigrants who tended to
quote the Koran as a form of political protest against their social disadvantage
and racial discrimination.

Badawi's own qualifications are far from rustic, even though he was born in a
village between the Nile delta and Suez 68 years ago. He graduated in theology
from Al-Azhar University in Cairo and took a second degree, in psychology, at
London. He has run Moslem colleges in Malaysia and Singapore and founded a
department at Ahmadu Bello University in Kano, northern Nigeria. He has advised
the Saudi monarchy on arrangements for the pilgrimage to Mecca, the haj, and
returned to London to become director of the central mosque in Regent's Park.

Today, Badawi, who enjoys the academic title of sheikh, is head of the
Libyan-financed Moslem College in west London, where imams are trained in
Islamic scripture and western culture. He is also chairman of a council of imams
and mosques in the UK.

He did not demur when I asked him if he was the most influential Islamic scholar
in Britain. 'We do not have a Vatican,' he said. 'But people come to me as a
scholar of Islam and ask my view.'

Moslems (here they are mainly Asian, not Arab) had not come to Britain to become
revolutionaries, nor to transform the society, he said.

But wasn't Islam a militantly evangelical religion?

'There is a lot of rhetoric . . . the British are immoral, the women are loose,
their men are dishonest, they are all racists. But if you start talking like
this, you are not talking Islam at all. This is the rhetoric of some of our
people who get into the media. Where does their extremism come from? It doesn't
come from Islam at all.'

Does it come from their position as immigrants, as a minority?

'That's right. From being a minority. Islam is a moderate religion. Islam is not
a religion of extremism at all. It never has been.'

But the Koran is in some respects very militant, I suggested.

'Some of the verses, yes. But the interpreter of Islam has to look into the
whole body. The Koran has verses which are extremely tolerant and verses which
are not. As scholars of the Sharia we always advise our students never to give a
fatwa based on one verse of the Koran or one hadith (example) of the Prophet.'

But your funding is from Libya. Not many people would associate Libya with

'This is western perception. Libya in terms of Islam is far more moderate than
people realise. They agreed with my fatwa. and, for example, the position of
women is the most advanced in the Arab world. The social system too. I know
Libya has a bad name, but it applies Moslem law intelligently.'

Badawi claimed he was free to argue with the Libyan government, and indeed had
demanded justice for the policewoman shot in St James's Square.

What, then, is Islamic fundamentalism?

Badawi called it a journalistic rather than scientific term, usually denoting
extreme proselytisers. In that sense it was 'marginal in the Moslem world'. The
real fundamentalism was what he preferred to call literalism, 'such as the
school of law applied in Saudi Arabia, following a literal interpretation of
Islam and in consequence having a very narrow view of certain things, yet
liberal in others.'

They do cut off hands . . . ?

'They cut off hands because that is the literal reading of the Koran.'

I asked whether it was particularly difficult for a fervent Moslem to become
integrated into another country.

'No, it's the same as for others. A religion is always a way of life. And a way
of life means certain rules and regulations and outlook. Our theologians said in
the past that to live a perfect Moslem life a person should be in a Moslem
country. It's the same for a Jew or a Christian.

'In reality, Islam, just like any other religion, is adaptable. From day one
Moslems were able to live in non-Moslem societies. After all, the Prophet did it
for 13 of the 23 years of his ministry.'

Islam has no central authority, no formal hierarchy, no Vatican. The influence
of imams such as Badawi depends not on rank but on their own prestige.

Badawi would have liked to emulate the Jewish community and create a Board of
Deputies to act as interlocutor, but resistance was too great. Instead, he
recently helped launch a British Moslem Forum, open to all except those who
claim exclusivity for their views.

Its first statement took pains to assure the government of 'our loyalty as
British subjects'. In the present crisis, it is voices such as these that are
needed - on both sides.


GRAPHIC: Picture, no caption

                   Copyright 1991 The Financial Times Limited

                             2530 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 25, 1991, Friday

When meetings bite the dust


SECTION: SECTION I; Management; Pg. 14

LENGTH: 620 words

The news that a trail of jets, mainly from US airlines, is plying the north
Atlantic with barely more passengers than crew has hit the headlines this week.
But it is by no means the first time that, in a period of great international
tension, airlines have suffered because businesses have asked employees to
cancel all 'non-essential' travel.

Companies based in America, in particular, have pulled the plug on most foreign
travel on numerous occasions for short periods:during the hijackings of the
1970s, after the US bombing of Libya in 1986, and in the immediate aftermath of
the PanAm disaster at Lockerbie over 1988.

Such caution may be entirely sensible in current circumstances. But it raises
the intriguing question of what will happen to all those 'non-essential'
meetings. Will they just be postponed until times are calmer (in a month or

Will they be shifted to the airwaves, and held by telephone or on video
conference links? Or will they never take place at all? In either of these
eventualities, the Dollars 64,000 question will be whether they were ever
necessary in the first place.

Even at the best of times, business travel is an emotive issue. Many a manager
will swear that a long trip abroad is necessary, even to meet just two people,
when the real reason is that he or she needs some thinking or reading time away
from the hectic rush of the office.

Meeting face-to-face is certainly often vital. Sensing the atmosphere in the
room, or observing someone's body language, can make a great deal of difference
- not just between people who do not know each other well, but also to familiar
colleagues in large and tricky group meetings.

Even if the meeting itself is straightforward, mutual understanding can be
improved dramatically by having dinner or a drink afterwards. And then there is
the well-known serendipity factor:the tendency for chance conversations in the
corridor, or an overheard remark, to spark breakthroughs in one's thinking or
decision making.

But most business meetings lie between these two extremes. In a more disciplined
world a fair proportion of them would be replaced by facsimile messages,
electronic mail, phone calls, and video conferences.

This is occurring within - and even between - some of the multinational
companies which have pioneered close collaboration between managers and/or
specialists working oceans apart.

Engineers and designers employed in Massachusetts by Digital Equipment, the
computer manufacturer, have found it far easier than they expected to
communicate by such means with their counterparts in Taiwan - easier in some
ways than with colleagues just down the road. Their experience certainly
challenges the much-researched convention that collaborators on a project need
to be located together - not just in the same building, but by each other's

In deciding whether travel is required to facilitate the most effective (and
efficient) form of communication for a particular purpose, companies would do
well to consider a body of path-finding Japanese research on 'organisational
information creation'.

Led by Professor Ikujiro Nonaka of Hitotsubashi University, near Tokyo, it
distinguishes clearly between 'information creation' and 'information transfer'
(with 'data' as a lower level still). Whereas face-to-face communication, often
of a very extended kind, may be necessary in order to create new information,
its transfer can - and should - frequently be accomplished by other means.

If companies can accept this principle in a crisis - or in a recession - there
seems no reason, other than inertia, managerial resistance, and airline
salesmanship, why they should not do so when times are normal.


                   Copyright 1991 The Financial Times Limited

                             2531 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 25, 1991, Friday

The Gulf War;
Fog of uncertainty seeps into the boardrooms of Europe - Concern is mounting
about the risk of a prolonged conflict and the incalculable damage that it would
inflict on business



LENGTH: 1215 words

THROUGHOUT continental Europe, companies are wrestling anxiously with the
challenge they dread most of all - uncertainty. Though many are still counting
on the hope of a quick end to the Gulf war, there is growing foreboding about
the risk of a prolonged conflict and the incalculable damage it would inflict on

Many companies have tightened security by restricting travel, especially by air,
and some have hired extra security guards. Deutsche Shell has cancelled an
opening ceremony for a polypropylene plant in Cologne, while in Frankfurt the
British businessmen's club has called off a dinner dance, fearing a terrorist

The travel industry has been a predictable casualty of these precautions.
Frankfurt airport is almost deserted, while Air France's traffic last week was
16 per cent down on the same period a year ago. Like Lufthansa, it has curtailed
advertising. Some hotels report that business seminars have been cancelled.

'The whole profession will suffer,' says Mr Christophe Charpentier, chairman of
Havas Tourisme, the large French travel group. 'There have been hardly any
clients in the agencies since the beginning of January.'

Luxury goods companies, such as France's LVMH, also say sales have suffered
since the start of the war, while Paris haute couture houses such as Louis
Feraud and Nina Ricci - which make half or more of their sales to the Middle
East - say traditional clients have gone to ground.

Beyond that, however, the business impact of the war varies between sectors and
countries. Inevitably it has been felt hardest in those which were already
showing signs of cyclical weakness.

In both Italy and France, whose economies have been slowing since last year,
companies and employers' organisations report delays in decisions on capital
investments and a slowdown in consumer durables purchases. 'Many people have
just stopped and are waiting to see what happens,' says Confindustria, the
Italian employers' organisation.

However, there are no reports that projects already approved have been cancelled
on any significant scale. Fiat, for instance, says it is going ahead with costly
plans to build large car plants in southern Italy.

But Fiat appears more worried about the threat a widening of the Middle East war
would pose to its investments in the area. It has a joint production venture in
Turkey, an assembly facility in Egypt and is building a joint venture assembly
plant in Algeria.

Peugeot, the French carmaker, plans to cut output in February and March at its
French plants. However, it does not expect any permanent lay-offs and says its
overall production this year should equal or slightly exceed last year's levels,
due to an expected increase in sales of smaller vehicles and diesel cars, in
which the company is strong.

However, some French car distributors are much more pessimistic, warning of a 20
per cent month-on-month drop in sales this month, though the carmakers'
federation expects the rate of slowdown to moderate during the year.

Peugeot's main French components suppliers, says its sales are continuing to
fall, following an 8 per cent drop in the second half of last year.

In Germany by contrast, where the domestic economy is still growing strongly,
carmakers including Opel, Porsche and BMW still expect higher sales this year.
This is in spite of weakness in important export markets such as Britain and the
US. Mr Arno Bohn, Porsche's chief executive, blames the Gulf crisis for a fall
in demand in those countries which began late last year.

Linotype, the German printing equipment manufacturer, says its UK subsidiary has
also suffered a sharp drop in Middle East sales. 'We really can't say how this
damned Gulf war will affect us,' says Mr Wolfgang Kummer, chief executive.

In Switzerland, many companies appear to have anticipated the Gulf war, to judge
by a quarterly survey of the business outlook conducted by the Union Bank of
Switzerland last December. It found that, for the first time since 1982,
negative forecasts by industry outnumbered the positive.

But attitudes differed considerably between sectors. The big pharmaceutical and
food companies were the most confident about the outlook for profits this year,
while engineering companies, machine-tool makers, construction groups and
papermakers were the gloomiest.

This broad pattern is confirmed in individual interviews. The Swiss Association
of Machinery Manufacturers reports 'a lot of uncertainty and hesitation' among
its members, many of whom have already lost business in the Middle East.

But Nestle, the Swiss food group, is much more upbeat. 'People do not stop
eating because of a conflict,' says a spokesman, who says the company has
imposed no travel restrictions and 'sees no point in spending precious
management time blocking out disaster scenarios'.

It obviously also helps to have business spread across a wide range of
countries. This is the case with large engineering equipment makers, such as
Asea Brown Boveri (ABB), the Swedish-Swiss group, and France's Alcatel-Alsthom
(formerly CGE), which say the war has had little or no impact on their sales so

Companies such as LVMH, whose business has suffered, are consoling themselves
with the prospect of a sudden rebound if the conflict ends quickly.
Confindustria thinks that outcome would stimulate a recovery in investment and
production across the Italian economy.

However, with every week that the war drags on the harder it will be for
European business and companies to continue to avoid thinking the unthinkable.
Indeed, some are already starting to do so.

'We are beginning to fear the worst,' says Mr Nicolas Hayek, chairman of SMH,
Switzerland's biggest watchmaker. 'Companies are looking at scenarios of what to
do if there is a long war, the oil wells burn and a second front is opened.

'We will think of cutting back, when we see sales falling by 10 to 15 per cent,
but we are nowhere near that yet.'

ABB also says that 'without wanting to over-dramatise', it has begun to evaluate
the impact on the world economy of a prolonged war and a surge in oil prices.

Confindustria says a war which lasted beyond the summer would 'impose a damaging
halt on the economy'. The BDI, its German counterpart, agrees, warning that the
country's buoyant economy would be hit by sharply higher interest rates and oil

Porsche says it would feel a serious impact if the oil price exceeded Dollars 30
per barrel for a long period. However, Mr Jurgen Strube, head of the BASF
chemical group, thinks that would only happen if Iraq attacked Saudi Arabia and
destroyed its oil installations.

Germany obtains only 20 per cent of its crude oil from the Gulf. However, this
is only a limited consolation since one of its main suppliers - along with Libya
and the North Sea - is the Soviet Union.

The use of Soviet force in the Baltics, coming on top of the Gulf war, has given
Germans a double jolt. 'We have some worries about the future,' admits Mr
Herrmann Strenger, chief executive of the large Bayer chemicals group.

Prepared from reports by William Dawkins in Paris, William Dullforce in Geneva,
Andrew Fisher and Katharine Campbell in Frankfurt, Guy de Jonquieres in London,
Haig Simonian in Milan and John Wyles in Rome.


GRAPHIC: Graph, no caption; Graph, no caption; Graph, no caption

                   Copyright 1991 The Financial Times Limited

                             2532 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 24, 1991, Thursday

The Gulf War;
Germany takes action against illegal exports



LENGTH: 460 words

ABOUT 110 German companies have been investigated for illegal exports to Iraq
and nine cases are likely to go to court, including at least one company which
has helped with the development of biological weapons and one which has helped
adapt the Soviet Scud missiles.

Mr Jurgen Mollemann, the economics minister, published these figures yesterday
and sought to reassure German and international public opinion that the recently
tightened export control laws would be further restricted.

The government has a dilemma over export controls. By drawing attention to the
problem it proves it is taking it seriously, something it did not do initially
in 1989, when German companies were found to be involved in building the Rabta
poison gas plant in Libya.

But it also seems to single out Germany for blame. Protesters in Israel have
begun to focus on the German 'merchants of death' and anti-war demonstrators in
Germany are turning their attention to big companies involved in arms exports.

Mr Mollemann claimed yesterday Germany now had the toughest legal controls in
the western world and one of his senior officials hinted that French companies
had been involved in much more irresponsible exports to Iraq. 'This is now a
matter of international co-ordination,' he said.

Meanwhile, the opposition Social Democrats are calling for a complete ban on all
arms exports outside the Nato area. Germany is the fifth largest arms exporter
in the world and arms exports account for 5 per cent of total exports. US
officials in Bonn accept that the system for stopping illegal exports has been
markedly tightened since 1989. 'There has been a sea change in attitudes,' said
one official. Another said the small number of breaches of the embargo against
Iraq did not amount to 'a second Rabta'.

The maximum sentence for breaches of the export control law has been raised from
three to 15 years' jail. The law has been broadened to catch even an individual
who passes on information to others who then help in the construction of a
poison gas plant, as happened in one recent case.

Mr Mollemann said yesterday that to close a potential loophole any involvement
with illegal weapons projects would fall under the law even if the particular
product exported was not on the banned list. He also announced a further
strengthening of the customs surveillance force, which will soon be linked by a
new computer network. Co-ordination with the intelligence services will be

According to US officials in Bonn, some sectors of German business have
criticised aspects of the new legal framework. However, all business
organisations have expressed outrage at illegal exports and their own
co-ordination system has helped track down some breaches of the law.


                   Copyright 1991 The Financial Times Limited

                             2533 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 24, 1991, Thursday

The Gulf War;
Baghdad criticises Turkey over US use of airbase


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 585 words

IRAQ has accused Turkey of committing 'unjustified aggression' against it by
allowing US warplanes to operate against Iraqi targets from a base on its soil.

A sharply-worded message yesterday from Mr Tariq Aziz, the Iraqi foreign
minister, to his Turkish counterpart, Mr Ahmet Alptemocin, raised fears that a
further front might be opened in the Gulf war, dragging Nato member Turkey
directly into the conflict.

The accusation came as the Israeli government considered its response to attacks
by Iraqi Scud missiles - the allied leadership has been concerned that any
Israeli military retaliation could fracture the coalition of allied forces
assembled in the Gulf and widen the war.

Mr James Baker, US secretary of state, however, played down such fears, saying
military action 'might not' hurt the coalition, but noted Washington's
appreciation of Israel's restraint.

Mr Moshe Arens, Israel's defence minister, said earlier in Tel Aviv that Israel
would take into account appeals from the US, Britain and others not to disrupt
the western-Arab alliance against Iraq.

Iraq's message to Turkey said: 'It has become certain to us and to the world
that US military aircraft have used the Turkish base of Incirlik to raid targets
within Iraqi borders . . . You know the consequences that may result from this

The US has been operating fighters and bombers out of the Incirlik base almost
since the beginning of hostilities.

The strong, though measured, language of Iraq's message almost certainly
reflects increasing concern in Baghdad about the importance of the Turkish bases
to the allied war effort, with two big raids from Incirlik taking place

The Iraqis have been angered by recent statements by Turkish politicians
reviving longstanding designs on parts of oil-rich northern Iraq.

Last night, Baghdad Radio reported that Iraq had threatened to 'respond
strongly' against Gulf Arab states permitting US-led allied air and missile
attacks against it from their territory.

The radio quoted information minister Mr Lattif Nassif al-Jassem, who did not
mention any names.

Five north African countries - Algeria, Morocco, Libya, Tunisia and Mauritania -
formally requested a meeting of the UN Security Council to discuss the Gulf war.

The US and Britain oppose such a meeting and would try to block it.

New York:
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Pounds index 94.1 (94.1)
New York: Comex Feb
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Tokyo open: Y131.485
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                   Copyright 1991 The Financial Times Limited

                             2534 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          January 23, 1991, Wednesday

The Gulf War;
Cost of war threatens to force tax rises in Germany



LENGTH: 451 words

THE German government is almost certain to have to raise taxes to meet the US
demand for more financial support for the Gulf war. The demand follows pressures
on the German budget from the cost of unification which would have pushed the
deficit to DM160bn (Pounds 54bn) even without the war.

Mr Theo Waigel, the finance minister, said yesterday he needed more details of
US demands before deciding on a tax rise. But senior officials now believe a tax
increase is unavoidable and Mr Jochen Borchert, the budget expert of the
Christian Democrat parliamentary group, also said yesterday a tax rise could not
be ruled out.

The opposition Social Democrats have called for a levy on the higher-paid. But
an increase in VAT or petrol tax is the most likely, with the latter most
favoured by the Finance Ministry.

The government has said a tax increase to pay for unity would be
counter-productive, but has not ruled it out to cover war costs. Bonn has
already contributed DM3.3bn (Pounds 1.2bn) to the Gulf in weapons and aid to
Egypt, Jordan and Turkey but it now expects to pay at least another DM5bn and
perhaps much more.

Many economists believe a tax increase is necessary to show that the government
is serious about bringing the 1991 budget deficit under control. Mr Waigel has
already announced an increase in unemployment insurance from 4.3 per cent to 6.8
per cent of income (for workers and employers) this year, coming down to 6.3 per
cent in 1992.

The expected tax increase, coming on top of the rise in unemployment insurance,
is sure to affect the coming wage round in west Germany. The main public service
union, OTV, begins negotiations on Friday on a 10 per cent pay rise and the main
engineering union I G Metall is looking for a large pay rise having reached its
goal of a phased introduction of the 35 hour week. The German government will
today consider tightening further export control laws after evidence that
several companies may have broken the trade embargo with Iraq. The government is
desperate to avoid a repeat of the embarrassing 'Rabta' episode in 1989, when
German companies were discovered to have helped Libya build a poison gas plant.

Although the export control laws have been significantly tightened in the past
year the cabinet will consider various measures drawn up by Mr Jurgen Mollemann,
the economics minister.

Since the embargo began about 80 German companies have been linked to possible
breaches but enquiries have led to action against only seven.

On Monday, however, it was reported that the customs authorities were
investigating a company called Havert Industrie-Handelsgesellschaft for its
possible role in adapting the Scud-B missile.


                   Copyright 1991 The Financial Times Limited

                             2535 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 22, 1991, Tuesday

The Gulf War;
Saudis' mood hardens beneath an outward calm



LENGTH: 918 words

HIGHLIGHT: Michael Field reports from Riyadh on how the war is shaping sterner
attitudes to Arab neighbours

I WAS sitting with a Saudi prince when the first air-raid warning sounded in
Riyadh on Sunday night. The sirens are not very powerful and the first we heard
of the alarm was when a friend of the prince telephoned.

He put down the telephone and said: 'You're going to remember this conversation,
I've just been told CNN says there's an Iraqi missile heading towards us.

'I'm damned if I'm going to let Saddam mess up my evening,' he continued after a
pause. 'Let's go out and see what's happening - I'll drive you home.' So we
marched out, the prince telling his staff to come to have a look because it was
'a night they'd remember'.

They seemed a bit less enthusiastic then he did, but they could hardly refuse to
follow the boss.

There was no panic outside and it soon emerged that this particular warning was
a false alarm. But as we drove back to the hotel and stopped at a red light a
car drew up beside us driven by a man in a gas-mask. 'Bah,' said the prince,
scowling at this rather funny sight, 'I bet you he's not a Saudi.'

Two hours later came a real missile raid. There were more than 20 bangs and
explosions, although some of those were caused by the launch of Patriot
anti-missile missiles and their subsequent passage through the sound barrier.

This time the mood was different. Most of the hotel guests and staff gathered in
a basement conference centre which is used as a shelter. About equally
frightened were the westerners and third world expatriate workers. A few of the
Filipinos and Indians clutched towels to their mouths and some westerners put on
gas-masks. One European wore an entire nuclear, biological and chemical warfare

The Saudis, in contrast, sat, sipped coffee and made a point of looking
unconcerned - because it is part of the Arabian tradition to be unimpressed by
dramatic events.

The pattern was more or less repeated yesterday. In Riyadh and the Eastern
Province many third world nationals are refusing to report for work and pleading
to be allowed to go home. But this is not possible because the airports have
been closed again. Room service, housekeeping and laundry departments in the
hotels have gone on strike.

Most Saudis, though, are working as normal - and their mood is hardening. When
the war started, people were sorry that it had come to a fight. Most Saudis had
expected there would be a last-minute settlement. Some had been uneasy about the
presence of American troops, though it was mainly conceded that they were a
necessary evil. Many more Saudis were delighted by the wonderful business
opportunity the allied forces present.

Now, with Saudi pilots flying missions into Iraq, the people are rallying behind
their government. 'Even the intellectuals are bitter about Saddam now,' a
minister remarked, 'though they don't hate the Iraqis. The simple people don't

A member of the royal family, the uncle of the prince who went out in the air
raid, went into more detail. 'When I look at Saudi Arabia,' he said, 'I'm
reminded of what the Prophet Mohammad said:'Life is fresh and beautiful and God
will make you inheritors of it to see what you will do with it.'

'That applies to us. We've got Mecca and Medina on one side of the kingdom and
oil on the other and that man's trying to ruin this heritage. When this war is
over I want Iraq's military installations turned into parking lots, Saddam torn
to pieces as General Kassem and Nuri as-Said (former Iraqi leaders) were and
Hussein Kamel (who built Iraq's military-industrial complex) working with bricks
and a trowel rebuilding Baghdad.'

In less passionate moments, Saudis say they hope that Mr Saddam will be
overthrown by his own people and then put on trial so that all his past
atrocities are brought into the open, which they say will be a sobering
experience for Syria, Libya and other unsavoury Arab regimes.

Like everything else in the kingdom, much of the Saudis' view of Mr Saddam
revolves around money. As a Saudi computer operator put it:'He's seen as a
threat to people's wealth. He could take their wives, that's all right, but
their money . . . !'

The point is that not all Saudis are rich but that most are, or dream of being,
traders. The professional work and the labour in the kingdom is done by
expatriates. One of the advantages of war, much commented on by Saudis, is that
it brings to an end a long period of uncertainty which was paralysing important
decisions at home and abroad.

The hardening of present attitudes towards Iraq is paralleled in the sterner
view Saudis are taking of their future relations with other Arab countries.

With the war going in their favour and Israel staying out of it, people are
becoming more optimistic about the chances of building a more stable Arab world

One of the themes one hears mentioned is that the concept of a single Arab
nation will be replaced by nation states each looking after their own interests
and deciding for themselves who are their friends, rather than having them
imposed on them by Arab nationalist emotions.

It is said that for many years after this war the Middle East will be divided
between those who supported Mr Saddam and those who supported Saudi Arabia.

The kingdom will help only those who were its friends. 'I don't know what the
King is thinking,' said a minister, 'but I wouldn't be surprised if we drop the
PLO and look for another Palestinian leadership on the West Bank, or maybe we'll
support the PLO but not Arafat and the present gang.'


GRAPHIC: Picture, Two exiled Kuwaitis wait anxiously on the telephone for
newsfrom Al Khafji on the Saudi-Kuwait border which was attacked by Iraqirockets

                   Copyright 1991 The Financial Times Limited

                             2536 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 22, 1991, Tuesday

The Gulf War;
Fears war may drag on give Arabs the jitters - Mubarak said to be considering
ceasefire proposal to let Iraq withdraw from Kuwait



LENGTH: 595 words

ARAB participants in the anti-Iraq alliance showed signs of nervousness
yesterday amid forecasts that war in the Gulf may drag on for weeks.

Dr Esmat Abdel Meguid, Egypt's foreign minister, made a lightning visit to Syria
to discuss the worsening crisis in the Gulf, and another Egyptian official
travelled to Libya.

A senior Egyptian journalist close to President Hosni Mubarak reported that
Egypt was considering proposing that a ceasefire be declared to allow Iraq to
pull out of Kuwait.

'Egypt could try to get the international community to issue a new warning after
four days of hell have passed. . . to get Iraq to start withdrawing without
delay, fully and unconditionally, from Kuwaiti lands,' wrote Ibrahim Nafei in
the semi-official Al-Ahram newspaper.

A senior foreign ministry official in Cairo yesterday denied that Egypt was
trying to launch a new peace initiative.

However, Arab states engaged in the US-dominated alliance against Iraq are
becoming anxious about the spectre of a long war and the threat of increasing
domestic opposition.

Syrian writers and artists, in almost unprecedented public criticism of the
government, protested at the weekend against Syria's support for the war against
Iraq. In Egypt, influential professional associations condemned what they
described as the 'US-western aggression against Iraq.' The syndicates,
representing thousands of doctors, engineers and other professionals, declared
solidarity with Iraq.

Syrian anxiety has been revealed in a spate of official commentaries over the
past few days highly critical of Iraq and President Saddam Hussein. Syria's
media also turned on neighbouring Jordan yesterday, accusing it of encouraging
the Iraqi leader's expansionist dreams.

Both Syria and Egypt have made sizeable contributions to ground forces ranged
against Iraq in Saudi Arabia. While Egypt has left open the possibility of its
participation in a ground offensive against Iraqi positions, Syria has insisted
that its forces were in Saudi Arabi for purely defensive purposes.

In further signs of inflamed passions sweeping the Arab world, political parties
and unions in the Yemen yesterday declared a Jihad or 'holy war' against the
western presence in the region.

Egypt is struggling to maintain its leading position in the Arab world despite
the growing unpopularity elsewhere of its participation in the US-led coalition
in the Gulf.

Yesterday Cairo closed its cultural institutions in Sudan and called in the
Sudanese ambassador to protest against demonstrations in Khartoum in which the
Egyptian flag was burnt and crowds called for the bombing of the Aswan dam.

Egypt has also closed its embassy in Yemen and imposed visa requirements for
citizens of Tunisia, Algeria and Morocco wishing to enter the country.

Cairo is by far the largest contributor of Arab forces to the alliance, with
40,000 Egyptian soldiers in Saudi Arabia. The government's policy is still
supported by the vast majority of Egyptians. There have been no protest
demonstrations and the only overt criticism has come from the fundamentalist
Moslem Brotherhood and some largely powerless professional associations.

Relations between Egypt and Sudan have deteriorated sharply since the outbreak
of the fighting. There is some suggestion that the Egyptian ambassador may be
recalled for consultations.

Egypt has decided to close the popular Cairo University branch in the Sudanese
capital and the Egyptian schools which are part of Cairo's cultural aid
programme. The offices of Egypt Air are also to be closed.


                   Copyright 1991 The Financial Times Limited

                             2537 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 21, 1991, Monday

The Gulf War;
The monster that refuses to lie down



LENGTH: 1897 words

HIGHLIGHT: Despite the massive allied onslaught, Iraq's air force remains
largely intact, reports David White

If there is anything familiar about the shape of the war against Iraq so far, it
is not from real life. Rather, it has been like a conventional plot from a
horror film:all the wiles and weapons of modern and imagined technology, pitched
against a sinister, implacable, unfathomable foe, retracting its remaining
tentacles, still able to strike out indiscriminately, seemingly impervious to
the damage inflicted on it.

This may not be an original analogy. One of the T-shirt slogans brandished by US
troops in Saudi Arabia is the single word 'Iraqophobia', echoing a film called
'Arachnophobia' for which you can see posters throughout the London Underground.

The war as we have seen it in the first four days has been uncannily one-sided.
Considering the quantity of Soviet, French, Chinese and Brazilian weapons in
President Saddam Hussein's armoury, the forces attacking Iraq have received
little opposition.

Mr Saddam is obviously intent on dragging out the conflict - if not in the hope
of winning, then in the hope of surviving, with enough of his military
establishment left to prop up his power base.

The air campaign launched by the US with its allies already seems to be be
taking longer than anticipated. Iraq is clearly unwilling at this stage to
engage many of its aircraft.

As with film monsters, the two sides are not fighting on the same terms. The
meticulous way in which the allies have set about bombing Iraqi military targets
has drawn as its principal response the haphazard firing of missiles into the
coastal plain of Israel.

Western audiences have been mesmerised by the display of military wizardry, the
video images of precision bombing, the targets being picked off with laser
designators, the bombs dispatched through skylights and doors. 'You can get the
men's room or the ladies' room,' a US Air Force colonel explained while
describing how Baghdad had been hit.

The words 'clinical' and 'surgical' are now in chronic overuse. The air
offensive has not been so much a textbook campaign as one on which future
textbooks will be based. It is remarkable in several respects:he capability for
exact air strikes, proven after earlier less-than-convincing attempts by the US
to do so. Neither the second world war nor even Vietnam saw anything comparable
in accuracy of bombing or in electronic warfare. The raid against Libya in April
1986 featured some of the same aircraft used against Iraq - F-111 bombers and
carrier-based A-6s - but some of the main targets were missed. The F-117A
'stealth' attack fighter, which has become in many ways the symbolic new face of
US air power, had its first outing in Panama in December 1989, making craters
with two of its 2,000lb bombs, somewhere wide of the mark.

Co-ordination has been impressive. The operation has involved different types of
aircraft from different Nato and Arab air forces, flying from scattered bases,
aiming at a range of targets, with electronic warfare support, fighter cover and
mid-air refuelling. The operation would become even more complex if Israel,
notwithstanding its reported promises not to retaliate in response to Iraqi Scud
attacks, were to start flying raids into Iraq or hitting it with missiles.

The rate of losses has been comparatively low - 'unbelievably low' according to
veterans of former campaigns. This is despite some fierce anti-aircraft fire,
and the inherently dangerous nature of some of the missions, reflected in the
high toll of Tornado losses from the RAF base in Bahrain.

Equally extraordinary has been the sheer intensity of the attacks. In the
bombing of the Hanoi and Haiphong region, which lasted for 12 days in December
1972, the US Air Force flew a total of 2,748 sorties. This was passed by the
allies at some time on the third day of their war against Iraq.

But - and it is a big but - the Hanoi bombings, devastating though they were,
did not win the war in Vietnam.

There have always been people to argue that air power can win wars, but the
latest manifestation of air power does not alter the counter-argument; that only
forces on the ground can capture ground and hold it. There is no sign that any
amount of bombing will make Mr Saddam give up or pull out the 350,000 soldiers
he has deployed within Kuwait's borders.

So far, according to military analysts, the allies have achieved two things. The
first reasons the first wave of bombers came back virtually unscathed may have
been that the Iraqis were maintaining only skeleton radar cover, leaving most of
their systems switched off to avoid detection. The second is at least local air
superiority:the ability to ensure control of the air when and where it is
needed. But that is less than absolute command of the skies.

According to yesterday's statement by Gen Norman Schwarzkopf, the US commander,
Iraq's nuclear research facilities are wrecked and chemical and biological arms
plants have been hit. The allies also claim 'significant damage' on Iraq's
command and control centres and airfields. But a number of these evidently
remains operable, and Iraq's air force is still largely intact. Since Iraq's
first ballistic missile attacks on the Tel Aviv and Haifa areas during the night
of Thursday to Friday a lot of attention has been diverted to tracking down as
many as possible of the Iraqi army's remaining mobile launchers, but some of
those are also likely to survive if they are kept unused in shelters.

The campaign appears to be getting more difficult as it progresses, especially
with poor weather conditions, and the longer it goes on, the harder it will be
to sustain. Britain is already understood to be grappling with delays in
transporting extra munitions to the Gulf. Although aircraft losses are still
low, the effect on the sortie rate if they are not replaced will be larger than
the bare figures suggest; with spare crews, an aircraft is expected to fly two,
three or more missions a day.

Talk of a 'ground phase' succeeding the 'air phase' of the war could be
misleading. When ground forces are brought fully into play (and we do not not
know quite how soon that will be), it will not mean the air war is over. It is
likely to be less a switch than a broadening of the battle to one in which air,
land, sea and amphibious forces are all involved.

The first air attacks concentrated mainly on strategic targets including
government buildings, pivotal command and communications facilities and missile
sites. The emphasis can be expected to move increasingly now towards tactical
targets. Aircraft such as French and British Jaguars - which the French have
already used in desert combat in Africa - and the lumbering American A-10s have
already been striking at Iraqi armoured formations as well as ammunition and
fuel stores in Kuwait.

When fighting on the ground begins in earnest, the air forces will be needed to
disrupt Iraqi supply lines and provide 'close air support' - which means
attacking troops and armour on the battlefield. They will also have to keep up
their bombing of airfields throughout Iraq. If they are unable to destroy Iraq's
air force in the air on in their shelters the only tactic is to ensure that
runways, permanent or improvised, remain unusable.

Air superiority is critical to the conduct of a land offensive by the allies.
Behind their elaborate obstacle belt, set back from the southern border of
Kuwait and part of their own border with Saudi Arabia, the Iraqis have something
of a numerical advantage in both men and armour.

Force levels have not been seen confronting each other on this scale since the
Korean war, and even there, since it was not open country, they could not all be
brought together on one battlefield.

The largest clash of armour between the second world war and now was that
between the Israelis and the Egyptians in Sinai in 1973, when up to 2,000 tanks
were involved. Ranged between Dhahran in Saudi Arabia and Basra in southern Iraq
there are now reckoned to almost four times as many - 4,000 to 4,200 Iraqi and
some 3,700 belonging to the US and western and Arab allies.

The allies will do everything to exploit the technological advantage which they
have displayed so graphically in the air. The battle for Kuwait, if Iraqi forces
are still in a mood and condition to resist, could become the proving ground not
only for untried weapons but also for a whole concept of 'air-land battle'.

The US alone is reckoned to have shipped at least 700 combat helicopters,
including the AH-64 Apache, to Saudi Arabia with anti-tank weapons. Until now
the conventional wisdom has been that the best weapon against a tank is a tank.
There has never been a full-scale battle in which helicopters have directly
taken on tank forces.

New weapons have been rushed out to the Gulf. Some have become common knowledge,
such as the equipping of RAF Tornados with Alarm anti-radar missiles, deliveries
of which were scheduled to start later this year. Others, including some new
targeting systems, have remained secret.

The US is fielding a new long-range US ground weapon, the Army Tactical Missile
System (TACMS), for the first time with some of its multiple rocket-launcher

Gen Schwarzkopf has also commandeered the only two aircraft delivered so far
under the so-called J-Stars programme (Joint Surveillance Target Attack) to
provide information on targets and on the damage done. In some cases equipment
has been sent out before being officially accepted into service. Final trials
will be carried out in the desert instead of on a test range.

Commanders' enthusiasm for their new equipment may not be completely
disingenuous. Forces chiefs worried about the survival of expensive new weapon
systems may be able effectively to haul them on board by using them in the Gulf.
This crisis has erupted in the midst of heavy pressure to cut back on
extravagant new equipment programmes in both the US and Europe.

There is little sign yet that the war against Iraq will remove these pressures.
Before the allied offensive began, a senior UK official said the Gulf crisis
might affect the pace, but not the underlying framework of the government's
Options for Change review cutting the armed forces.

However, operations in the Gulf have already brought some lessons home which
could well affect the way in which defence cuts are implemented in a number of

It will force hard thinking about the whole area of support and logistics -
known to military men as the 'tail' - which has come to the fore in the massive
effort to deploy and maintain personnel and equipment to the Gulf, as well as
about the kind of forces required for military intervention overseas. Until the
summer, the talk was all of lighter, easily transportable forces; what turned
out to be needed in the desert was heavy tanks and guns.

The bane of defence planners is that they are always planning for the wrong war.
The UK brought out a defence review in 1981 cutting the navy, only to find
itself rethinking its priorities the following year when the Falklands were

Now a whole arsenal that the US and western allies have built up over 40 years
for fighting a defensive war against the Soviet Union is being used to confront
the dictator of a country that 40 years ago was a backward Arab kingdom, with a
token army and an air force of two squadrons, receiving military assistance from


GRAPHIC: Picture, The anti-tank Apache helicopter, one of 700 combathelicopters
thought to have been shipped by the US alone to SaudiArabia ; Picture, Ground
crewmen scramble to finish attaching an external fueltank to the underneath of a
US Air Force F-15 fighter

                   Copyright 1991 The Financial Times Limited

                             2538 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 19, 1991, Saturday

Peace will be more difficult



LENGTH: 1154 words

HIGHLIGHT: Ian Davidson offers a personal view on the aftermath of war

For apologists of high-technology warfare, the first results of the war in the
Gulf have been a triumphant vindication. It would be prudent to be aware,
however, that this war is likely to end badly for everybody, especially for the

The huge difficulty of managing a successful political re-entry after a Gulf war
is only one daunting strategic reason why we may wish that we had not got into
this game in the first place. Military defeat must weaken both Saddam Hussein
and Iraq, but the outside world has no way of knowing that Saddam's successors
would really be preferable, in terms either of Middle East stability or of
western interests. What will be the consequences of the war for Iran? for
Jordan? Egypt? Algeria? Morocco? The fact that the West has carved up the Middle
East before, according to more or less arbitrary recipes and competing national
ambitions, may not guarantee stability this time.

But there are even bigger reasons for questioning western strategy, reasons
which go to the heart of the west's vital interests. These can be encapsulated
under four headings:the role of the United Nations; the foreign policy of the
United States; relations between the US and Europe; and the unity and security
of Europe.

President Mitterrand, like other western members of the coalition, harps
constantly on the legal justification of the UN cause. No civilised person would
disagree ' in principle. The problem lies in the slither from the notion of
'right' to the notion of 'law'.

The western coalition has moved, over the stepping-stones of UN resolutions,
from moral and legal outrage, to armed force. But we have no reason to suppose
that the developing half of the world is ready to bow to an international police
force, especially when it is led and largely manned by the western super-power.
In countries with an established legal culture, the police are (more or less)
admitted to be the legitimate representatives of the state. But in the UN there
is no state, and the Americans are almost bound to be perceived, by people in
the Arab world, as vengeful crusaders acting in the interests of America.

Unfortunately, precedent points this way. In the past decade, America has
repeatedly succumbed to the temptation to mobilise against one irritating Third
World country or another. The list is embarrassingly long:Libya, Lebanon,
Panama, Grenada, and now Iraq. 'Ah yes,' they say, 'but Iraq is different.' But
the people of the Third World will ask:'Is America different?'

Each time, Washington defiantly justifies its 'force projection'. The difficulty
is that its arguments sound arbitrary and US-centred; behind the morality, there
is the exercise of American power for American reasons. When the costs are added
up, human, financial and political, an apparently impressive demonstration of
modern air power will seem ephemeral indeed. The military bungling in Grenada
and Panama was politically bearable, because these expeditions were too trivial
to require major political reconstruction afterwards. The Gulf is different.

Indeed, the odds are that it will lead the Americans to a profound reassessment
of the balance-sheet of force projection; if so, they may well conclude that
losses are almost bound to out-weigh profits. It is virtually unavoidable, when
the war is over, that they will reassess defence relationships with their allies
in Europe. 'I am concerned,' said Douglas Hurd in Paris this week, 'at the
strong feeling in the US, that European countries are not making a proportionate
contribution. This will weigh on US-European relations for some time to come'.

At every step of diplomatic escalation in the UN, the Europeans have voted with
the US. It just so happens that several of them have also refused to have
anything to do with the war. The Germans claim that they are inhibited by their
constitution; the Belgians and the Danes do not even have that excuse.

From a US perspective, the French posture must seem even more distasteful, and
all of a piece with the Pharisaical policy they have pursued in Nato these past
25 years. Diplomatically wilful, they want credit for being part of the
Alliance, without quite being a full member. They send a token force to the Gulf
which will not, of course, infringe the Iraqi frontier. They explain that their
Jaguars are not quite up to the most exciting roles by the fact that France has
spent so heavily on its nuclear deterrent. But the bottom line is that the brunt
of the fighting is being borne by others, so that the French can keep their
pro-Arab gloves on.

The problem with war is its unpredictability. Some European governments may not
know for sure what America's war aims are, or they may know that they do not
agree with them. A very senior British official tells me that his wily
colleagues have made sure that the US adapted its war aims to those of Britain.
Even if this flattering tale is true, it would not guarantee that US aims would
be the same at the end of the war as at the beginning. That is the problem with
force projection as a policy option.

Adding insult to injury is the pious insistence of some of these same Europeans
that they must have a special role in the peace. The Americans have long
complained that Europe refuses to carry a fair share of Nato's military burden.
Now they see that most Europeans are not prepared to contribute, even to a
policy they voted for. This cannot fail to affect American assessments of
Europe's place in American security interests.

And now events in Moscow and the Baltic states are casting a harsh new light on
those interests. Some analysts claim to see a direct link from the ending of the
Cold War, both to the Iraqi invasion and to the intensity of the US response.
Saddam Hussein felt free to kick over the traces because his Soviet ally was in
retreat; but he did not foresee that Bush, too, would feel free to respond with
force, for the same reason.

We now face a concatenation of events which suggest that the Cold War may not be
as much over as we thought. A right-ward shift in the Soviet leadership seems to
be accompanied by an ominous strengthening of the role of the armed
forces:Soviet cheating over the conventional arms reduction treaty, and
foot-dragging over reducing Soviet forces in Poland and eastern Germany.

Given Moscow's domestic problems, there is no reason to foresee an immediate
revival of the Soviet threat to western Europe. But we may have reason to fear
the emergence of an authoritarian regime which relies upon the armed forces, the
KGB and the Communist Party, and which might be much less friendly to the west.

That could be some way off. But if it were to occur, we should be bitterly sorry
if the war in the Gulf had caused deep fractures between Europe and the US, and
between the members of the European Community. But it would be too late to
protest that we went to war to uphold the law.


GRAPHIC: Illustration, no caption; Picture, no caption; Picture, no caption;
Picture, no caption; Picture, Ever more uncertainty - clockwise from upper left
-President Bush, President Mitterrand, tanks in Vilnius, Gulf forces

                   Copyright 1991 The Financial Times Limited

                             2539 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 19, 1991, Saturday

Travel - The Gulf War;
Counting the cost of the conflagration - Travel trade prepares for its own



LENGTH: 952 words

HIGHLIGHT: David Churchill on the rise of boycotts and the slump in bookings

THE conflagration in the Gulf has brought the worst crisis for Britain's travel
trade since the Falklands conflict nine years ago. As then, consumers have voted
with their feet and are keeping out of travel agents' shops throughout Britain.

Estimates of a 50 per cent drop in bookings since the Gulf war started are
considered conservative:'People are just not interested in buying a holiday in
times of war,' said one agent this week, surveying his empty shop.

Bookings to countries close to the conflict - Tunisia, Egypt, Israel and Morocco
- have been suspended by all leading tour companies and travel agents until at
least February 15.

Holidaymakers who had booked to go to these destinations will either have their
money refunded or be able to book another holiday, as was offered to 5,000 or so
Britons earlier this week. According to operators and agents, most people have
opted to re-book a holiday - Tenerife and other Spanish resorts being the most
popular destinations.

The main problem centres on Cyprus. Last year the island enjoyed its best-ever
year for tourists from Britain:numbers rose by 48 per cent. Its proximity to the
Gulf, however, has turned holidaymakers away in large numbers. This week Thomson
Holidays and other large operators took Cyprus out of their tour programmes
until mid-February at the earliest.

The move incensed specialist tour companies to Cyprus, especially as the Foreign
Office has not advised Britons to leave as it has done with countries closer to
the Gulf.

'It is quite clear that Cyprus is not in the war zone, as the action taken by
the UN in relocating 800 staff from other areas to Cyprus clearly shows,' said a
statement from 14 specialist tour operators, including Cyprus Airways and
Olympic Holidays.

Charles Newbold, Thomson's managing director, disagrees. 'We couldn't be sure of
being able to bring customers out if air space near Cyprus became crowded
because of the war,' he says.

Holiday insurance, moreover, would not cover most holidaymakers. All policies
taken out to protect consumers when abroad have a force majeure clause which
limits liability when war breaks out.

Compensation claims for consumers who feel their winter break has been spoilt
are unlikely to be successful because of this clause.

The impact of the Gulf crisis has been felt by the travel trade for some time,
and bookings and trends have reflected this.

Cruise companies took an early decision to change itineraries to avoid the
eastern Mediterranean. Cruise demand is now strongest for destinations in the

Consumers had already decided to boycott some parts of the Mediterranean - such
as western Turkey, Greece and even southern Italy - as a result of war fears.

Neither Greece nor Cyprus (nor western Turkey) is on the Foreign Office's
25-strong list of destinations Britons should avoid.

These countries are: Algeria, Bahrain, Bangladesh, Egypt, Iran, Iraq, Israel,
Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, northern Nigeria, Oman,
Pakistan, Philippines, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, south-east
Turkey, United Arab Emirates and the Yemen.

The Gulf war has caused minor problems for long-haul travellers for some
months:flights over the Gulf region have been diverted, with refuelling stops
switched to Delhi or Helsinki; in some cases journey times have only been
slightly extended.

The outlook for the travel business obviously depends on how quickly the war is
over. The six countries most affected - Cyprus, Tunisia, Morocco, Israel, Egypt
and Turkey - received nearly 2m British tourists last year.

Even if the war were to end quickly, many travel agents and operators are
worried about terrorist outbreaks in these areas and hostility towards tourists.

Most operators, however, are likely to cut capacity rather than prices. Past
experience has shown that discounting holiday prices only loses money for the
operators:they now prefer to sell at prices that provide a reasonable profit

In fact, the uncertainty surrounding the Gulf crisis has masked the fact that
many operators had already pushed up prices in the New Year ahead of the 1 or 2
per cent average price increase most claimed. The average cost of a package deal
sold through Thomas Cook, for example, has gone up from Pounds 385 to Pounds 420
per person.

Once matters get back to normal, however, the large multiple chains of travel
agents will be offering price cuts in a desperate attempt to gain what market
share they can. Smaller agents, without the financial muscle to offer such
reductions, will increasingly be forced out of business this year.

Forward buying of aviation fuel means that most of the leading short-haul
operators will be able to keep to their no-surcharge guarantees unless the price
of oil doubles or trebles from its present level. However, most long-haul
holidays will be surcharged as most rely on scheduled rather than charter

Even so, long-haul holidays away from the Mediterranean have been most in demand
this year. Yet even these are suffering from fears of terrorist attacks on
airports and airlines.

With an unfortunate sense of timing, British Airway's long-haul holiday
subsidiary Speedbird chose this week to launch a luxury holiday programme,
Worldclass, which covers upmarket hotels and destinations using business or
first-class travel.

Peter Conway, Speedbird's general manager, defends the decision to launch the
new brand:'There is a small but significant market segment that wants the best
from a holiday and can afford to pay, even in times of recession and
uncertainty.' Average price for one of these luxury holidays, he expects, will
be Pounds 2,500 per person.


GRAPHIC: Picture, Panic stations, soldiers and hotel workers perform dawnprayers
in the basement of a hotel in eastern Saudi Arabia which isbeing used as a bomb

                   Copyright 1991 The Financial Times Limited

                             2540 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 19, 1991, Saturday

The Gulf War;
US television coverage offers catharsis and snap judgments



LENGTH: 776 words

HIGHLIGHT: The networks are flying the flag but keeping the experience of
Vietnam war mistakes in mind, reports Lionel Barber

THE GULF War has exposed many of the strengths and weakness in US television.
Technological prowess has been offset by instantaneous judgment and inevitable
hyperbole. Yet the striking feature this week has been how television - like the
US military - has sought to atone for the mistakes of the Vietnam era.

After the sideshows in Grenada, Libya and Panama, Operation Desert Storm has
given the networks their first chance to fly the patriotic flag since those dark
days, more than 20 years ago, when many Americans accused television of invading
their living rooms, deserting their country and helping to lose a war.

Moments before the first bombs landed on Baghdad, Mr Dan Rather, the now veteran
CBS news anchorman, confessed that the start of a war always brought a lump to
his throat. 'It's very important that we are with them in solidarity,' he said
of the F-15 and F-16 pilots, 'we just hope that they all come back.'

Mr Rather has a chronic tendency to reach for the emotional jugular; but when
the first tracer bullets lit up the night sky over Baghdad, a collective
catharsis filled the airwaves. Relatives of servicemen wept on camera, relieved
no doubt at the minimum American casualties but doubly gratified that American
technology was getting the job done.

Throughout that first dramatic night, there was little sense that this was an
allied effort. No one seemed to notice that Saudi and Kuwaiti pilots were
dumping ordinance on fellow Arabs; still fewer correspondents bothered to
mention r the British, many commentators had problems pronouncing the Tornado
bomber, producing a garbled version known as the Toe-nail-doe.

Operation Desert Storm was the all-American show, and within hours it had
created an atmosphere bordering on euphoria. After the first US-led air-strike,
NBC's correspondent in Tel Aviv delivered the massively premature judgment:'It
looks as though Israel is out of the war.'

CNN, which scored heavily by broadcasting out of Baghdad, long after ABC, CBS
and NBC were off the air, put forward the bold claim from its Pentagon
correspondent, quoting Defence Department officials, that US airpower had
'decimated' the Iraqi air force and the elite Republican Guard.

Soon afterwards, one of the local Washington correspondents became similarly
feverish, inquiring of his counterpart in Tokyo:'Are the markets betting it's
over, Peter?'

President Bush would doubtless settle for a Seven-Day War, but television's
tendency to declare victory after less than 24 hours visibly unnerved the White

By morning, Mr Bush invited cameramen into the cabinet room, and warned against
unwarranted optimism. At the Pentagon, Mr Dick Cheney, US defence secretary,
felt obliged to remind Americans that there had been - and would be -

Television loves to turn all news stories into emotional rollercoasters.

In a war, particularly in the kind of intense, high-technology conflict which
the Gulf is shaping up to be, the temptation to be trigger-happy proved
irresistible this week.

The exception was Mr Peter Jennings, ABC's anchorman, who happens to be
Canadian. He remained a model of calm judgment. When he was unsure, he said so;
or he turned to one of the battalion of ex-generals who have been hired by all
the networks to peer through what we Clausewitz fans all referred to by Friday
as the fog of war.

Some of these consultants - notably retired Admiral William ('We'll clean their
clocks') Crowe - risked becoming cheerleaders; but others, such as General
Michael Dugan, proved highly informative wheel-on strategists.

CBS euphemistically described General Dugan as retired. In fact, he was sacked
as US Air Chief of Staff only last September for predicting that the US would
launch a massive, violent air war aimed at 'decapitating' the Iraqi leadership
and targeting not just President Saddam Hussein, but his family and mistress

The good general was largely proved correct, which is why he found himself in a
television studio in Washington this week.

With US television viewers glued to news programmes, several companies and the
US Army have suspended advertising, a response that could cost networks millions
of dollars in lost revenues, writes Louise Kehoe in San Francisco.

After the outbreak of hostilities, the army moved swiftly to stop broadcasts of
its recruitment advertisements, which promise recruits an opportunity to learn a
trade or obtain college scholarships under the slogan 'Be all that you can be,
in the Army'.

Scores of companies have asked the networks not to air their commercials during
war coverage, according to television industry officials.


                   Copyright 1991 The Financial Times Limited

                             2541 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 18, 1991, Friday

The Gulf War (Military Strategy);
Jordan condemns allied action



LENGTH: 443 words

JORDAN last night bitterly condemned the US-led air strikes against Iraq,
describing them as 'a brutal attack on an Arab Moslem country and people.'

The harsh Jordanian response reflected a mood of shock and dismay among the
populace at Iraq's failure to respond effectively to the allied onslaught, but
many Jordanians were also relieved that Baghdad had not yet sought to engage
Israel in the conflict.

Antagonism against foreigners was running high on the streets of Amman. Several
western journalists were attacked and abused by people angered by the US action.
Jordanians continue to doubt allied claims of having inflicted substantial
damage on Iraq's war machine. They are suggesting the west is putting out
disinformation to sap Iraqi morale.

'You will see Iraq will attack Israel,' said a Palestinian at the Baqaa refugee
settlement on the outskirts of Amman. 'The battle has just begun.'

In Syria, the mood was calm and business was continuing more or less as usual.
The official press laid the blame for the war squarely on Saddam Hussein.

Colonel Muammar Gadaffi, Libya's leader, appeared to approve Thursday's attack
implicitly, saying it should be confined to liberating Kuwait.

'Efforts must be made so that the operation does not go any further than the
recovery of Kuwait in conformity with Security Council resolutions,' Col Gadaffi
said in a message to Mr Javier Perez de Cuellar, the UN Secretary General.

The Gulf Co-operation Council, umbrella organisation for the six Gulf states
most threatened by Iraq's invasion of Kuwait, welcomed the US-led action.

Nearly 100,000 Yemenis took to the streets of Yemen's capital Sanaa yesterday to
denounce the air assault. In the western Moroccan town of Oujda an estimated
1,500 people, led by students, protested against the attack. Schools in Morocco
have been closed until Sunday.

In Cairo the mood was relaxed. Elated Kuwaitis danced in the streets at dawn and
many Egyptians expressed delight at the apparent humiliation of Iraqi President
Saddam Hussein.

In the French Mediterranean island of Corsica, hundreds of Arabs fearing a
racist backlash because of the Gulf War are abandoning their jobs and returning
to North Africa.

Thousands of women and children in Khartoum, the Sudanese capital, demonstrated
for a Jihad (holy war) against the US.

In Pakistan police fired teargas and baton-charged about 800 students trying to
march on an American cultural centre to condemn the USattack on Iraq.

Witnesses in Peshawar said police took action after pistol shots were fired into
the air by some demonstrators chanting 'Down with America' and 'Long live Saddam


                   Copyright 1991 The Financial Times Limited

                             2542 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 17, 1991, Thursday

Book Review;
Hands across the water



LENGTH: 838 words

REAGAN AND THATCHER By Geoffrey Smith The Bodley Head, Pounds 14.99285 pages

It cannot have escaped notice that in the present Gulf crisis the British
government has once again sided more naturally with the United States
administration than with continental Europe. The division is not absolutely
clear-cut, to be sure. There are doves in Washington whose views are not greatly
different from many in the British Labour party, just as there are hawks in
France who must have regretted that their government almost dropped out of line
with the allies in the last-minute search for a settlement. By and large,
however, Britain tends to go with the US rather than the Continent.

There was an important exception once, which may have served to reinforce the
rule. That was Suez in 1956. Britain and France acted together until the
Americans obliged them both to back down. The two countries drew different
conclusions from that experience. The French determined to become more
independent and, when they needed partners, to prefer the Germans. The British
decided never to get out of line with the Americans again if they could possibly
avoid it.

All British prime ministers and American presidents have tended to have a
special relationship with each other, at least from Churchill and Roosevelt,
then Attlee and Truman. After Suez, when Harold Macmillan became prime minister,
a primary aim was to restore the relationship to its old closeness. On the
whole, it was successful. Macmillan was at times thoroughly at home with
President Kennedy.

Yet the relationship has not always been smooth; nor have the benefits been all
one way. Sometimes the perceptions differed on the two sides of the Atlantic.
Harold Wilson incurred the wrath of his left wing for not condemning President
Johnson's Vietnam policy; Johnson thought that Wilson did not support him

Between Margaret Thatcher and Ronald Reagan, as Geoffrey Smith shows in this
well-timed book, there were downs as well as ups. The British prime minister,
for instance, was distinctly put out when the Americans put troops into Grenada
against her wishes and did not even tell her that the invasion was imminent. She
was repeatedly at odds with the president over nuclear weapons, which she
believed he wanted to get rid of too lightly. She was also deeply suspicious of
his attachment to the Strategic Defence Initiative, though on such matters she
was obliged to tread carefully for fear of being excluded altogether.

Where the relationship plainly did pay off for Britain was in the Falklands
campaign, which would never have been possible without American logistical
support. Equally, the success of the campaign raised Mrs Thatcher's standing in
the world at large. Thus when she began to soften her line towards the Soviet
Union with the emergence of Mikhail Gorbachev, it was easier for the president
to follow suit because the once Iron Lady, so admired on the Republican right,
had set the example.

The prime minister probably also performed one invaluable service for the
president, and arguably for the Atlantic Alliance as a whole. That was to allow
the Americans to use bases in Britain for the bombing raid on Libya in 1986.
What Mrs Thatcher understood, and others did not, was that it was hard to go on
asking favours from the Americans and then to turn them down when they asked one
themselves. The decision was unpopular at the time, but one notes that it is
criticised much less in retrospect. Mrs Thatcher was bold enough to take it.

Of course, the prime minister and the president had a lot in common. They knew
each other before they reached the highest office and when many people failed to
take them seriously. They had similar views on communism and the deregulation of
the economy. But, as Geoffrey Smith points out, if Ronald Reagan had been a
British politician, she would probably not have had much time for him. In many
ways, she had much more in common with his predecessor, Jimmy Carter:hard work
and a passion for detail. But it was Reagan she took to; there is no doubt of
the extent of her affection and admiration for him, and it was reciprocated.

Moreover, the president, too, could be bold. It was he who sacked all the air
traffic controllers involved in the August 1981 illegal strike - one of the acts
for which he is most remembered in Europe - and then had the aircraft flying
again in no time. That was well before Mrs Thatcher stood up to the miners, and
plainly left a strong impression on her.

Did the special relationship do any harm? Certainly not to the Americans. Smith
quotes Dean Rusk, a former secretary of state, as saying:'We have to have
somebody to talk to in the world.' Reagan liked it that way. He liked talking -
and listening - to Mrs Thatcher.

The problem for Britain, however, is the inequality of the relationship, and one
can only wish that the Americans would tell us more often to get closer to
Europe. If our best friends don't tell us, who will? Sometimes they do - in


                   Copyright 1991 The Financial Times Limited

                             2543 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 17, 1991, Thursday

The Gulf War;
Conflict divides Arab world into three camps - The Arab Line-up



LENGTH: 867 words

THE EVENTS of recent months shook up the Middle East's political and strategic
kaleidoscope as it has rarely been disturbed before. Old alliances crumbled, new
ones were forged and close friends fell out.

Fear, anger and bitterness spilled over in the early days after the invasion of
Kuwait. Discussion in such forms as the Islamic Conference Organisation foreign
ministers meeting in Cairo and the Cairo Arab League summit were marked by some
of the toughest exchanges witnessed in many years.

Thus, Prince Saud al-Faisal, Saudia Arabia's foreign minister, and Mr Farouk
Kaddoumi of the Palestine Liberation Organisation traded sharp words at the ICO
meeting in session on the day of the invasion. Sheikh Sabbah, Kuwait's foreign
minister, fainted after being upbraided by the Iraqi delegation at the Arab
summit, held on August 10.

King Fahd held a chilly meeting in Cairo with Mr Yassir Arafat at which the
Saudi monarch listened in silence to the PLO chairman and then swept from the
room without a word - a sign of his extreme displeasure over the PLO's support
for Iraq.

When the dust settled after the first anxious days, it was clear that the Arab
world was deeply sundered and that three main competing trends had emerged. The
first included Egypt, Saudia Arabia and Syria at the head of a narrow majority
opposed to the Iraqi takeover and committed to reversing it; the second,
including such countries as Algeria and Tunisia, chose to sit on the fence; and
the third, made up of the PLO, Yemen, Sudan, Mauritania and Jordan was broadly
sympathetic to Iraq.

These divisions have remained more or less in place ever since, although some
countries such as Sudan have moved towards a slightly more neutral position

What made certain that divisions would be deep and enduring was a decision taken
by a majority of just 12 in the 21-member Arab League on August 10 to commit
forces to Saudia Arabia to stand alongside the US presence there.

The Arab decision was crucial for Saudia Arabia's King Fahd who had resolved
within about 24 hours of the Iraqi invasion to call for American support. It was
also vital for President Hosni Mubarak of Egypt who had secretly committed
Egyptian forces to Saudia Arabia before August 10.

Most critical for the anti-Saddam alliance was the decision of Syria to commit
troops to the Saudi desert to stand alongside the US-led multinational force.
Without Syrian backing, it is doubtful if the Arab majority would have held

However, Syria's bitter and longstanding opposition to Iraq and the deep
personal enmity between President Hafez al-Assad of Syria and President Saddam
Hussein was enough to neutralise whatever misgivings Damascus may have had about
the course it adopted.

Morocco's King Hassan also pledged to send troops, but the 1,000 or so Moroccans
serving in the Saudi desert are little more than a token force.

The Gulf crisis has caused its own problems for Mr Arafat. The PLO leader is now
unwelcome in more Arab capitals than at any time in a long and turbulent career.
And most critically his main benefactors in the Gulf, such as Saudi Arabia and
the United Arab Emirates, have cut off funds. They have not paid a penny since
August 2, an awkward development that has led to substantial cuts in the PLO

Ominously for Mr Arafat, Gulf officials say they will not forgive what they
regard as the PLO's betrayal. 'We have learned who our friends are and who our
enemies are,' said a Saudi official. 'We will act accordingly and decisively.'

But the shape of Arab relationships in the post-crisis era will depend on how it
evolves. If the crisis is resolved peacefully and the Palestine question comes
sharply into focus, Mr Arafat may yet return to centre stage, wheeling and
dealing on behalf of his people.

The Gulf crisis has been an economic disaster for countries such as Jordan and
Yemen, whose economies have been most directly affected by the drop in workers'
remittances and a cut-off of Gulf assistance, but for others, notably Egypt and
Syria, it has produced benefits.

Not only have the two countries - which between them, have contributed about
50,000 troops to the war zone - received up to Dollars 1b each from Saudi Arabia
and the other Gulf states, but very substantial amounts of Egypt's debts have
been written off.

Tension built steadily in the run-up to the January 15 deadline. Sentiment
appeared to have swung against war, even among the most hawkish of the Arabs
such as Mr Mubarak, who was keen in the early days for a quick strike against

Iraq's efforts to garner Arab support by appealing to Islamic sentiment and by
emphasising the Iraqi attachment to the Palestine cause has been aimed at
embarrassing Baghdad's opponents. Whether Iraq has succeeded or not in this
bitter propaganda war, its approach will hardly facilitate a process of
reconciliation after the crisis ends.

The great fear of the anti-Saddam alliance is that the Iraqi leader will emerge
strengthened from the crisis. In these circumstances he might prove even more
difficult to control and be in a position to sow further discord in the
countries who dared oppose him in his Gulf venture.


GRAPHIC: Picture, no caption; Picture, no caption; Picture, no caption; Picture,
no caption; Picture, no caption; Picture, no caption; Picture, Against Iraq,
King Fahd of Saudi Arabia, Egypt'sPresident Mubarak and President Assad of
Syria, on the sidelines,Algeria's President Chadli, friendly towards Iraq -
Yassir Arafat ofthe PLO and Jordan's King Hussein, maverick, Libya's Col Gadaffi

                   Copyright 1991 The Financial Times Limited

                             2544 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          January 16, 1991, Wednesday

Middle East in Crisis;
Abu Nidal strikes again at heart of the PLO



LENGTH: 332 words

ABU NIDAL strikes again: yesterday's assassination in Tunis of three top
officials of the Palestine Liberation Organisation (PLO) shows how the renegade,
who broke with Mr Yassir Arafat in the early 1970s, continues to wreak mayhem in
the Palestinian movement.

Assassins controlled by Sabri al-Banna (his real name) have probably spilled
more Palestinian blood over the years than agents of Israel's Mossad secret

Ever since Abu Nidal drifted away from the PLO mainstream he has been a thorn in
the side of Mr Arafat and his senior lieutenants.

Recently, there was speculation that Abu Nidal's Fatah Revolutionary Council,
weakened by internal feuding, and lacking a strong sponsor would gradually
wither away.

But the events of the past 48 hours have shown that it still has the capacity to
inflict lethal harm on its internal PLO enemies.

The question always arises on these occasions: on whose behalf was the FRC

Abu Nidal has been widely reported as having moved back into the Iraqi orbit,
after spending some time in Libya. But there are conflicting accounts about his
present whereabouts - he is said to be either in Libya or in Baghdad.

If the Fatah renegade is in Baghdad, the plot would thicken, since what motive
could the Iraqis have for wanting to remove Salah Khalaf from the scene? Unless,
of course, his lack of enthusiasm for the PLO's present closeness to Iraq had
earned him Baghdad's enmity.

If Abu Nidal was operating on behalf of Iraq, it would send a chilling signal to
others in the Palestinian movement who might not share Mr Arafat's present
enthusiasm for President Saddam Hussein.

Whatever the murky truth of this latest bloody chapter in PLO history, the FRC
has once again lived up to its reputation of being, in the words of a recent
official US report, 'the most dangerous terrorist organisation in
existence.'imes writers in London and around the world consider the probable
impact of the crisis on global business and trade


                   Copyright 1991 The Financial Times Limited

                             2545 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 12, 1991, Saturday

IRA and the Libyan connection



LENGTH: 720 words

HIGHLIGHT: Kieran Cooke on the sinister implications of the Eksund trial

ON October 30 1987, French customs officials boarded a rusty, decrepit cargo
ship, the Eksund, off the Brittany coast.

The French suspected a drug-running operation. Instead, they discovered enough
arms to fight a small war - 150 tons of modern weaponry including Sam 7
missiles, rocket launchers, automatic rifles, machine guns and large quantities
of Semtex explosive.

The arms had come from Libya and were destined for the IRA. The French had
stumbled on the IRA's biggest arms-smuggling operation.

For three days this week, those on board the Eksund, all Irish, have been on
trial in a Paris court. The details that emerged were fascinating and - to the
security forces fighting the IRA - frightening.

Five men were involved in the Paris trial including three alleged members of the
IRA. Mr Adrian Hopkins, the alleged skipper of the Eksund, was tried in his
absence, having jumped bail last July and escaped to Ireland, where he is now in
custody facing charges in connection with the Eksund case. The French have made
no move to have him extradited.

Mr Hopkins is the former head of a travel company that went bankrupt in the
early 1980s. He was not a member of the IRA but seems to have been co-opted into
the gun-running operation through a mixture of adventurism and financial

The IRA had no shortage of funds: Mr Hopkins has said he was paid Pounds 100,000
for one gun-running trip alone.

His statements to the French police, read to the Paris court, confirmed for the
first time the extent of Libya's involvement in the arms-smuggling operation and
its extensive contacts with the IRA.

Mr Hopkins told French police that before the Eksund's trip, he had skippered
four arms-smuggling voyages between Tripoli and the Irish coast. The arms cargo
landed at a remote pier south of Dublin and then transported to various arms
dumps in the Republic of Ireland and Northern Ireland had amounted 150 tons.

Those arms are now fuelling the IRA's campaign in Northern Ireland, on the
British mainland and on the Continent. In spite of extensive searches on both
sides of the Irish border, fewer than 10 tons of arms from those Libyan
shipments have so far been uncovered by the British and Irish security forces.

The shipments from Libya reveal a lamentable breakdown in security. The IRA took
considerable risks in landing such large arms consignments. Heavy lifting
equipment would have been needed to unload the weapons and trucks were probably
used to deliver the arms crates to bunkers north and south of the Irish border.

Until the chance discovery on board the Eksund, neither Irish or British
intelligence had any apparent knowledge of the scale of the IRA's arms-smuggling

Mr Hopkins says that Libyan naval ratings helped load the arms in the military
section of Tripoli harbour. Libyan diplomats, based in Malta, liaised between
the IRA and Tripoli. Mr Hopkins says the IRA seemed to be on very good terms
with the Libyans. It had even brought gifts for its Libyan contacts, which
included a double bed, an alsatian dog and a clock.

One of the alleged IRA men gave an impassioned, two-hour speech to the court in
which he drew comparisons between the Eksund's mission and a French expedition
launched more than 200 years ago which attempted to remove the British from
Ireland. Both voyages had the same purpose he said - 'the arming of the Irish

Among the witnesses for the defence was Ms Bernadette McAliskey, who, as
Bernadette Devlin, was once a Westminster MP.

She told the court about what was described as the oppression of the nationalist
community in Northern Ireland and how Britain abused the law.

The maximum sentence the court can give is 10 years' imprisonment. All five
found on board the Eksund have been charged with transporting weapons of war in
French waters and intent to disturb public order through terror or intimidation.

The French prosecuting counsel has called for seven-year sentences for the
alleged IRA men, with lesser sentences for Mr Hopkins and Mr Henry Cairns, a
Dublin bookseller and former business associate of Mr Hopkins.

The judges say that because of the complexity of the case, judgment will not be
given until March 6. The IRA's campaign, well oiled by its weapons from Libya,
will continue long after.


GRAPHIC: Picture, Lethal cargo - French customs officers search the Eksund
offthe coast of Brittany in October 1987

                   Copyright 1991 The Financial Times Limited

                             2546 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 10, 1991, Thursday

Slovakia will defy Prague's arms exports ban to protect defence jobs



LENGTH: 495 words

THE independence-minded republic of Slovakia will defy a Czechoslovak government
ban on the production and export of heavy weapons which threatened nearly 70,000
Slovak jobs, the republic's prime minister said yesterday.

The decision is a fresh challenge to Mr Vaclav Havel, the Czechoslovak
president, who personally inspired last year's decision by Prague to wind down
arms production and cease exports immediately on moral grounds. Czechoslovakia
was the Warsaw Pact's second largest arms exporter and, until last year,
supplied tanks to Iraq and trained Iraqi pilots.

Mr Vladimir Meciar, the Slovak prime minister, said the government's decision on
Tuesday evening hinged on demand in the international arms market.

'It is our decision and we are not asking the federal government for approval,'
he said. Approval was not needed after January 1, under a new law redistributing
powers between the Czech and Slovak republics and the federal government, he

Slovak leaders only last month threatened to secede from the Czechoslovak
federation during a crisis in negotiations on the division of powers. They took
offence when Mr Havel suggested that he would have to increase the powers of the
presidency in order to deal with a secession threat.

Mr Meciar, who ironically is a member of the movement founded by Mr Havel, Civic
Forum, emphasised that weapons made in Slovakia, the heavy arms forge of the
nation, would not be sold in 'areas of conflict'.

The indications are, however, that this may be interpreted liberally. Mr Jiri
Dienstbier, the Czechoslovak foreign minister, on his return from a visit to
Saudi Arabia and the Gulf Emirates last week reported interest in buying
Czechoslovak weaponry.

Mr Peter Milhok, a senior official in the new Slovak Ministry of International
Relations, agreed that arms exports by Slovakia would conform with Czechoslovak
foreign policy.

Slovakia could sell weapons to Saudi Arabia and other nations in the Middle East
and North Africa but would continue banning exports to Iraq, Libya and terrorist
groups, he said.

Under the federal government's original plan, arms production in Slovakia was to
be cut by the end of next year to 7 per cent of its peak level of 1988. Slovak
officials challenged this target, warning of the social implications of having
nearly 10 per cent of the Slovak labour force - including its highest-paid
workers and technicians - thrown out of work in the defence industry.

Mr Meciar said the federal government's decision to run down Slovak arms output
swiftly had led to 'very unfavourable consequences'. New civilian products were
proving difficult to find for the sprawling tank factory at Martin and other
Slovak arms plants whose purpose-built machinery cannot be converted to civilian

No official figures are available on the current level of arms production in
Slovakia or the Czech republic, which produces machine guns, rifles and other
light arms.


                   Copyright 1991 The Financial Times Limited

                             2547 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 10, 1991, Thursday

Judgment postponed

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 19 words

A French court delayed judgment until March on four Irishmen accused of
gun-running from Libya for the IRA.


                   Copyright 1991 The Financial Times Limited

                             2548 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 10, 1991, Thursday

The Middle East;
Palestinian may go free



LENGTH: 154 words

Belgium yesterday signalled its readiness to free a Palestinian jailed for life
for a grenade attack on Jewish schoolchildren in Antwerp in 1980 in return for
four Belgian hostages which the Fatah Revolutionary Council said earlier this
week were being released, writes David Buchan in Brussels.

The Foreign Ministry confined itself to confirming that the government had
agreed within itself - but 'not with any third party' - on a possible swap
between Mr Said Nasser, who is held at Louvain, and the Houtekins family,
kidnapped from a yacht in the Mediterranean in 1987.

A ministry official added that Belgium was continuing its contacts in order to
secure the release of the Houtekins family. These contacts have taken the
ministry's political director several times in recent months to Lebanon, and it
is also considered significant that Belgium is about to sign an economic
co-operation accord with Libya.


                   Copyright 1991 The Financial Times Limited

                             2549 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 9, 1991, Wednesday

'Jail gun-runners'

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 35 words

A French prosecutor called in Paris for three alleged IRA men to be jailed for
up to seven years for trying to smuggle weapons from Libya. The three were on a
ship caught in French waters three years ago.


                   Copyright 1991 The Financial Times Limited

                             2550 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 7, 1991, Monday

Irishmen on trial

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 25 words

Four Irishmen accused of trying to smuggle 150 tonnes of weapons and explosives
from Libya to Ireland for the IRA go on trial in Paris today.


                   Copyright 1991 The Financial Times Limited

                             2551 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 5, 1991, Saturday

Pistol smuggled


LENGTH: 38 words

THE pistol with which Mr Patrick Sheehy, the IRA terrorist suspect, apparently
shot himself this week was part of an arms consignment of about 24 similar
weapons smuggled to Ireland from Libya, police sources in Dublin said.


                   Copyright 1991 The Financial Times Limited

                             2552 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 4, 1991, Friday

The Middle East;
Misrata summit is sign of the times


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 399 words

PRESIDENTS Mubarak of Egypt and Assad of Syria can scarcely have found
themselves in more unusual surroundings, but their presence yesterday in a tent
in the Libyan seaside resort of Misrata was a sign of the times in Arab

They had gone to Libya at the request of Colonel Muammar Gadaffi for a 'summit'
to discuss the Gulf crisis as time slips away to the January 15 UN deadline for
Iraq's withdrawal from Kuwait.

Few details emerged of what was discussed in Col Gadaffi's tent and later at a
meeting in a hotel where the Arab 'summiteers' were joined by General Omar
al-Bashir, Sudan's ruler. But the Libyan leader said before the talks he was
optimistic of a peaceful resolution of the crisis.

The Misrata 'summit', overshadowed by President Bush's new offer of direct talks
with Iraq, was part of renewed Arab efforts to persuade Baghdad to withdraw from
Kuwait before it was too late.

Mr Mubarak, whose calls for a peaceful resolution of the crisis have become much
more insistent in the past few days, told Egypt's Middle East news agency, MENA,
soon after his arrival in Libya that he hoped 'with all honesty' that Iraq would
withdraw from Kuwait 'to spare the world the devastation of war'.

Gen Bashir, whose country appears to have shifted its position from support of
Baghdad to a more neutral stance in recent weeks, said on his arrival that he
hoped the 'summit' would come up with a new initiative to end the conflict.

Col. Gadaffi said the meeting, set up at only 24 hours' notice, would 'discuss a
joint view and what could happen in the Gulf in the coming days.

'We want to pool our efforts and unify our position to serve the future of the
Arab nation,' he declared.

The positions of the four Misrata 'summiteers' were hardly unified, however,
reflecting differences in the Arab world that have been exposed since August 2.

While Egypt and Syria have sent troops to the Saudi desert to participate in the
US-led alliance, Libya has condemned the presence of foreign forces in the

In Cairo, Egypt's semi-official press assailed Iraq over its abuse of Mr Mubarak
following his warnings earlier this week of the dangers of the region sliding
into the 'merciless hell' of war.

The mass-circulation daily Al-Akbar described President Saddam as a man 'who has
lost his mind'. Iraq had denounced Mr Mubarak as a 'coward' and a stooge of the


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                             2553 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 3, 1991, Thursday

Death throes grip Somalia's bankrupt regime


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 792 words

HIGHLIGHT: Julian Ozanne on a new tragedy

REPORTEDLY holed up in an underground bunker near the airport, President Mohamed
Siad Barre was yesterday desperately trying to cling on to power in the
disintegrating Somali capital, Mogadishu.

Few observers give the president, 80, much chance of surviving after 21 years of
strong-arm rule which began with promises of democracy and justice and has
progressively deteriorated into anarchy and tribal warfare, with government
soldiers going on a spree of rape, pillage and murder.

'These are the terminal throes of a bankrupt regime,' said one western diplomat.

But whatever happens, Somalia is poised to become another Liberia with violently
antagonistic clans pursuing deep-seated rivalries and vendettas, threatening the
fragile stability of the region.

It is a blood-stained legacy that any future administration will find hard to

The Somalia that Mr Barre, then army commander, seized in a bloodless coup in
1969 was already beset with tribalism and political instability.

Independence in 1960 had thrown together two separately administered
territories, Italian Somalia in the south and British Somalia in the north.

In an attempt to forge a sense of national unity, Mr Barre declared the
establishment of 'scientific socialism' under the slogan 'tribalism divides,
socialism unites'.

He courted the communist bloc and allowed the Soviet Union to establish a naval
base at Berbera and to train and supply his army.

But the goal of national unity was elusive. In an attempt to tap the deep strain
of greater Somali nationalism, President Barre declared an ill-fated war against
Ethiopia in 1977, in which he hoped to annex the mainly ethnic Somali region of
the Ogaden.

With the backing of Saudi Arabia, he cut diplomatic relations with Cuba,
withdrew his offer of military facilities and expelled 6,000 Soviet troops. But
western promises of military assistance failed to materialise and with Soviet
and Cuban backing, the Ethiopian government routed the Somali invasion.

Mr Barre's humiliating defeat undermined his credibility and popularity, and in
1978 a group of tribal dissidents and disgruntled army officers tried to
overthrow his regime.

The coup was crushed easily but the Ogaden defeat marked a fundamental turning

Severe reprisals against the Majeerteen clan, many of whom were implicated in
the coup, alienated an important group. Ethiopia gave support to rebel groups
operating in northern Somalia, and Mr Barre turned increasingly inwards to his
own clan to maintain his shrinking power base.

The US moved into the vacuum left by the departing Soviets, now entrenched in
Ethiopia, but the relationship with the west was always uneasy, marred further
by the president's links with Libya.

At home, Mr Barre's attempt to forge a Somali nation also failed because he did
not practise what he preached.

While he talked about eliminating tribalism, he packed senior positions in the
army, civil service and government with members of his Marehan clan and his
immediate family.

'Twenty-one years of violent behaviour by the government have eroded public
confidence in the efficacy of working within the system as a means to bring an
institutionalised dictatorship to an end,' said a recent report by Africa Watch,
an international human rights organisation.

Dissidents who tried to lobby within the system were detained, tortured or

Several massacres were reported in the past two years, including an incident
last July when more than 100 people were shot dead at a soccer stadium when they
shouted anti-government slogans at Mr Barre.

In the north, at least 50,000-60,000 people died of war-related causes between
May 1988 and January 1990 and more than 400,000 Somalis have fled across the
borders to escape government retaliation and bombing raids.

As rebels took control of most of the country, the president became dismissively
dubbed 'the mayor of Mogadishu'.

But until last weekend the rebels seemed reluctant to push into the city.

Now Mr Barre's chances of survival are poor. The rebels refused yesterday to
negotiate with him and are determined to force him out.

But he remains trapped in a stronghold protected by his presidential bodyguard
and tribal militias who have no option but to keep on fighting if they are to
save their lives.

For Somalis, the tragedy, which has already claimed 500 lives in the last four
days, may be prolonged. If so, the chances of instability flowing over into
neighbouring Ethiopia and Kenya will increase.

Superpower involvement and interest in the country is now minimal. The US, which
still has a military access agreement to use the ports of Berbera and Mogadishu,
has completely shunned its Somali assets in the Gulf build-up.


GRAPHIC: Map, no caption; Picture, Barre, holed-up near airport

                   Copyright 1991 The Financial Times Limited

                             2554 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 3, 1991, Thursday

The Middle East;
Arab ministers in drive to avoid war


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 507 words

THE FOREIGN ministers of Egypt, Syria and Libya held two rounds of talks in
Cairo yesterday amid signs that the Arab leaders are mobilising for a
last-minute diplomatic drive to avert war.

King Hussein of Jordan arrived in London at the beginning of a European tour
that will also take him to Paris, Rome, Bonn and Luxembourg. The king will meet
Mr John Major, the UK premier today.

Mr Yassir Arafat, chairman of the Palestine Liberation Organisation and one of
Iraq's strongest supporters, said in Baghdad he believed war would not break out
when the UN January 15 deadline for Iraq's withdrawal from Kuwait falls due.

'I cannot believe there is a new Nero ready to plunge the world into war and
destruction,' Mr Arafat told Le Figaro, the Paris daily.

In Cairo, the foreign ministers met for a first session in the morning, then
held a 75-minute meeting with President Mubarak, before continuing their
discussions among themselves. Egypt, in recent days, has stepped up its calls
for a peaceful settlement.

But Iraq has shown no sign of compromise. The Iraqi newspaper al-Thawrah said
Iraq had completed its combat preparations and warned the US of dire
consequences of war.

'We confidently tell Bush. . . and those who ally themselves with him. . . that
the results of confrontation will be against their wishes,' INA, the Iraqi news
agency, quoted the paper as saying.

While Libya has demanded Iraq's withdrawal from Kuwait, it has also condemned
the presence of foreign forces in the region. As time runs out before the UN
deadline, the propaganda war on both sides intensifies.

Iraqi statements have become more hardline and its opponents are starting to
reply in kind through third parties.

A new radio station, calling itself the 'Voice of Free Iraq', has started
broadcasting using frequencies provided by Syria, Egypt, Saudi Arabia and other
Gulf states. Its particular target is Mr Saddam Hussein, the Iraqi president.

Commentaries interspersed with popular songs and news items place the blame for
the present crisis squarely on the shoulders of the Iraqi ruler.

One of the radio commentaries described President Saddam as a tyrant and a
despot who had turned Iraq into an edifice of terror.

'The only project in your life in which you have achieved an unparallelled
success was the erection of this large prison and edifice of terror the
foundation of which you have dug in every Iraqi home,' it said.

A group of scientists yesterday announced they were setting up a task force to
evaluate the environmental impact of a Gulf war. The move came after an
international meeting of scientists in London.

At the conference, Dr John Cox, a chemical engineer, warned that a Gulf war
would cause hundreds of oil well fires in Kuwait which could rage for up to a
decade. Over 1bn people could face starvation because the pall of smoke would
prevent Asian monsoons.

Mr Basil Butler, a petroleum engineer, said fires would be a 'major problem' but
could be contained and would take less than a year to extinguish.


GRAPHIC: Picture, A British Challenger tank belonging to the Desert Rats
movescloser to Kuwait

                   Copyright 1991 The Financial Times Limited

                             2555 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           December 18, 1990, Tuesday

The Middle East;
Crisis speeds up drive for chemical weapons curbs

BYLINE: VICTOR MALLET, Middle East Correspondent

SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 329 words

INDUSTRIALISED nations - spurred by the Gulf crisis, the end of the Cold War and
other arms agreements - are likely to make a big push in 1991 towards a global
convention to control chemical weapons, senior British officials said yesterday.

'The problem is definitely accelerating, and it is accelerating most obviously
in the most dangerous area - the Middle East,' said one official. 'Compared with
10 years ago, the position is a lot worse.'

He was speaking after a seminar in London on Friday which discussed export
controls against chemical weapons. Hosted by the Foreign Office, the meeting
included delegations from the Soviet Union and eastern Europe as well as the
Australia Group of western countries, which seeks to harmonise chemical export

Britain is obviously pleased by the results of the seminar, which come after the
use of chemical weapons during the 1980-1988 Iran-Iraq war and at a time when
Baghdad has openly threatened to let loose such weapons again. Western officials
fear that the taboo against the use of chemical weapons which has held sway
since the First World War has now lost much of its force.

Only three countries - the US, the Soviet Union and Iraq - admit to having
chemical weapons, but about 20 others possess or are believed to be trying to
acquire an offensive chemical capability. They include Libya, Syria and Israel.

There is open acknowledgement in London of the difficulties of trying to enforce
chemical export controls, when so much equipment and so many ingredients have
'dual use'.

Delegates at the seminar, however, agreed on the need for co-operation between
the Australia group and other countries and said they would produce a collated
list of chemicals controlled by each government.

As with the Missile Technology Control Regime, the members of the Australia
Group accept that they cannot completely stop a determined country from
obtaining sensitive technology, but they can buy time.


                   Copyright 1990 The Financial Times Limited

                             2556 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          December 12, 1990, Wednesday

Occidental stock rises as Irani takes helm


SECTION: SECTION I; American News; Pg. 4

LENGTH: 462 words

STOCK markets do not respect the dead, not even Dr Armand Hammer. News of the
Occidental Petroleum chairman's death prompted a sharp rise in the company's
share price yesterday morning, as had past rumours of his demise, writes Martin
Dickson in New York.

The unsentimental reason is a belief among most analysts that Occidental is
likely to performing better under Dr Hammer's designated successor, Mr Ray
Irani, than it has in recent years under the dictatorial Dr Hammer.
Alternatively, it might attract a takeover bid.

While Dr Hammer may have been one of the most remarkable and individualistic
businessmen of the 20th century, this has not translated into great profits for

The Occidental share price is not much higher than it was at the start of the
1980s, while a broad basket of US oil stocks has almost trebled in value over
the same period.

And on a wide variety of financial measures - such as profit margins, earnings
per share, and total returns to investors - Occidental has badly lagged most
other leading US oil companies.

The group's main attraction has been its unusually high dividend - giving a
yield of about 10 per cent.

Nevertheless, Dr Hammer transformed Occidental over the past 15 years from a
modestly sized oil company, with a high exposure to Libya, into a large,
integrated energy and chemicals business. He shifted most of its interests to
the US and maintained a high profile in Britain's North Sea, where its Piper
Alpha platform suffered a catastrophic explosion in 1988 with the loss of 167
lives. The UK government endorsed sweeping reforms of offshore safety in the
North Sea oil industry following a report on the disaster, which was highly
critical of Occidental.

The company has one of the best records in the industry for finding oil at
relatively low cost, for replacing its reserves and for cannily trading oil

The problem has been that all this involved a heavy debt burden, while some of
Dr Hammer's deals turned out to be none too profitable. The 1985 acquisition of
Midcon, a big gas pipeline company, was hit by fierce competition, while Wall
Street was baffled by the group's move in the early 1980s into the meat-packing

However, one of the group's most recent large acquisitions - that of Cain
Chemical for Dollars 1.25bn in 1988 - proved successful, placing the company
among the US petrochemical leaders.

Much of the credit for building the chemicals business goes to Mr Irani, a
Lebanese-born chemist who came to Occidental from the presidency of Olin,
another US chemicals company, in 1983.

Mr Irani - a man as retiring as Dr Hammer was social - is not expected to retain
the late chairman's attachment to many of Occidental's less profitable
peripheral activities.


GRAPHIC: Illustration, no caption

                   Copyright 1990 The Financial Times Limited

                             2557 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          December 12, 1990, Wednesday

Dr Armand Hammer - a blend of altruism and self-interest

SECTION: SECTION I; American News; Pg. 4

LENGTH: 1149 words

DR Armand Hammer, who died on Monday at the age of 92, was one of the most
remarkable business figures of the twentieth century - and one of the hardest to
pin down. Through a blend of opportunism, drive and ruthlessness, he built a
series of business fortunes.

But he craved much more. He wanted influence, which he defined as getting things
done his way by going right to the top. He wanted to shape world events, by
acting as a citizen diplomat shuttling between international leaders. And in his
many philanthropic and cultural activities, he was driven by an unusual blend of
altruism and self-interest.

Dr Hammer's private, business and public lives were built on a remarkable series
of personal contacts, which he developed and exploited in a way that would have
made lesser people cringe. He associated with Lenin and with Prince Charles,
with Deng Xiaoping and Mrs Thatcher, and with most American presidents of the
last half century.

He helped to break the ice with Mr Nikita Khrushchev in a visit to Moscow in
1961, and he had frequent access to Mr Leonid Brezhnev. On his 90th birthday
Soviet television showed a one-hour documentary about his life.

But there was another side to the man. He was the subject of four serious
run-ins with the US Securities and Exchange Commission.

In 1976 he was convicted for making illegal contributions to President Nixon's
1972 election campaign. He appeared in court in a wheelchair apparently close to
death and was spared prison on humanitarian grounds.

Last year President Bush pardoned the offence on the recommendation of the
Justice Department.

Dr Hammer was born in New York's Lower East Side on May 21 1898, the son of
Russian immigrants. He was named after Armand Duval, the romantic hero of Dumas'
'La Dame aux Camelias'.

But it is likely that his father, a prominent figure in radical politics, also
had in mind the symbol of the Socialist Labour party - an arm and a hammer.

Dr Hammer's business acumen emerged at an early age. While studying medicine at
Columbia University he took over the running of his father's drugs business, and
quickly noticed an extraordinary rise in the sale of one of its more obscure
products - tincture of ginger.

In the early days of prohibition, a medicine which was 85 per cent alcohol was
suddenly in hot demand. Mixed with ice cubes it made a powerful highball. Dr
Hammer promptly secured a world monopoly in ginger.

What changed Dr Hammer's life was a visit to the Soviet Union in 1921. Waiting
six months after graduation to begin his medical internship, he determined to
use his medical skills to help the victims of starvation and typhus in the

While visiting an asbestos mine, the great idea struck. The Soviets needed
food:the US had a grain surplus. Hammer would ship grain in, and export in
exchange commodities which were of little or no use to the depressed Soviet
economy:furs, timber, semi-precious stones.

Lenin got to hear of the idea and liked it. He summoned Dr Hammer to Moscow for
a meeting which was to achieve near mythological status in the Hammer saga.

'I felt almost as if I had been taken up to the top of a mountain, from which
all Russia could be seen below, and Lenin had said, 'Take your pick.' This
immense country, with its inestimable wealth of natural resources, its vast
reserves of labour and its almost untouched potential, had been laid open to me
by its leader.'

He obtained the first private concession awarded by the Soviets: an asbestos
mine in the Ural mountains. He established a large export-import business. Later
he obtained a second concession:to own and operate the first pencil factory in
the Soviet Union. Millions of Soviet citizens, including Khrushchev, Brezhnev
and Chernenko, learned to write with Hammer pencils.

By 1930 Stalin was in power and not nearly so friendly. Dr Hammer left Moscow
with a mountain of czarist art which he had snapped up at rock bottom prices and
which he proceeded to sell off through a New York gallery and an extraordinary
series of department store sales across the US.

For the next quarter of a century he wheeled and dealed. He made one fortune by
correctly anticipating a run on beer barrels at the end of prohibition and
another by spotting in 1940 that a shortage of whisky and a surplus of potatoes
added up to an opportunity for a distillery business.

He also made fortunes in livestock feed and cattle. In 1956 he and his wife each
put Dollars 50,000 into a struggling West Coast oil company with total assets of
just Dollars 78,000. Occidental Petroleum was to become one of America's largest
oil companies.

As usual he was lucky - Occidental almost immediately struck oil. But there was
also daring opportunism - the forays into Libya and the North Sea which made the
company's fortunes - and personal bravery.

At crucial moments in negotiations with Col Gadaffi's Libyan government, Dr
Hammer would slip unannounced in and out of Tripoli to turn the negotiations his

There was also plenty of controversy. Years after the event, Dr Hammer is still
attacked by rivals as the man who sold out western interests in agreeing to
Libyan price demands in 1970:a move which has been described as the beginning of
the end for the age of cheap energy.

The oil industry was his perfect outlet. It was big, wealthy and powerful. It
brought endless scope for negotiations at the highest levels of state. It had
room for grandly ambitious and risky projects which might or might not come off
- a fertiliser deal with the Soviet Union said to be worth Dollars 20bn, a
mindboggling plan to shift natural gas from northern Siberia to the US west
coast, an international trade centre in Moscow.

There was the private jet, the innumerable press conferences, the non-stop work
schedule. As he moved into his eighties, Dr Hammer seemed to become ever more

For years he ruled the company with what has been described as a 'whim of iron'.
At least half a dozen executives were singled out as his heir-apparent.

Although his shareholding was small, he treated the company as his personal
fief:at one stage he made a habit of asking his directors to give him undated
resignation letters.

His own employment contract extended to 1998, with renewal options, and the
annual meeting was held on his birthday.

The lines between his own interests and his company's were blurred. Asked about
its backing for Hammer's art collections, executives would respond wearily that
the collection had provided 'significant public recognition to the corporation'.

Dr Hammer's motives and methods remain the subject of controversy. But his
achievements will seem to be more important in the long run.

His business dynamism and energy, his steady championing of east-west relations,
his cultural exchanges and his philanthropic efforts - all these add up to an
extraordinary life story.


GRAPHIC: Picture, no caption; Picture, no caption; Picture, no caption; Picture,
no caption; Picture, Scenes From a Life - From left to right, Dr Hammer as
aschoolboy, Hammer meets Nikita Khrushchev in 1961, Hammer with LeonidBrezhnev
in 1976, In Moscow greeting former President Reagan as MrGorbachev looks on,
Hammer's 92nd birthday party this year

                   Copyright 1990 The Financial Times Limited

                             2558 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          December 12, 1990, Wednesday

Libya attacks US

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 19 words

Libya accused the US of 'international piracy' for airlifting hundreds of Libyan
prisoners of war out of Chad.


                   Copyright 1990 The Financial Times Limited

                             2559 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           December 4, 1990, Tuesday

France passes policy test in Chad as rebels consolidate


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 643 words

WHEN President Francois Mitterrand announced last June that France's military
presence in Africa was there to help against external aggression or protect its
own citizens, not to intervene in internal conflicts, there were many sceptics.

France has for decades seemed so reluctant to shed its imperial mantle over its
former African colonies that many believed this change of policy would not stand
up to serious testing. In Chad this weekend, however, the French Foreign Legion
stood by while a rebel army marched into the capital Ndjamena.

French soldiers even stood guard for talks between the rebel leader, Mr Idriss
Deby, and the remnants of the former government of President Hissene Habre, and
ensured a smooth handover of power.

'The time has past when France could pick and choose the governments in these
countries, change them or maintain them as she wished,' said Mr Roland Dumas,
France's foreign minister.

After Gabon in May, where France reinforced its military contingent in order to
protect French citizens but maintained an approximately scrupulous refusal to
intervene on behalf of President Omar Bongo, the events of the last few weeks in
Chad appear to confirm the reality of the new policy.

Mr Jean-Pierre Chevenement, the defence minister, pressed home the point by
rejecting the argument that France should aid the Chad government against
external attack on the grounds that Libya was arming the rebel troops of Mr

'Arms deliveries are not enough to define a case of downright military
aggression,' he said.

Diplomats in Paris appear to accept this interpretation of French policy, but
note that France's relations with Mr Habre have been uneasy for some time. They
add that Mr Deby appears to enjoy the respect of many French government
officials, and they have welcomed his assurances that he will respect human
rights and establish a multi-party system.

Besides Gabon, four other African countries have French military contingents
under bilateral defence agreements:Senegal, Ivory Coast, Central African
Republic and Djibouti, where France also has an important naval base.

France's action in Chad and Gabon sends a clear message to these countries that
they cannot rely on French military support to prop up their regimes. At the
same time, France is linking the provision of aid to its old African partners to
the degree to which they embrace the path of democracy. All the same, some
scepticism lingers. Would France ever really abandon President Felix
Houphouet-Boigny, the 85-year-old president of the Ivory Coast?

Meanwhile, Mr Deby, who heads the Popular Salvation Movement, spent his first
full day in the Chad capital of Ndjamena yesterday and consulted with his
officials while receiving a stream of visitors, including France's ambassador to
Chad, Mr Francois Gendreaux.

Mr Gendreaux, who met Mr Deby along with Mr Leo Steinmetz, a senior French
official, told reporters he expected Chad to 'conduct its affairs in a manner
respecting its geography and history' - an implicit reference, it seems, to the
new government's relationship with Libya.

French officials accept that while Libya provided military training and
equipment for the rebels, the link will not prove a destabilising factor in the
region. The officials said yesterday that the 1,800-strong French military
contingent in Chad would gradually be reduced.

Mr Deby moved quickly to consolidate ties with his ally, ordering the
repatriation of some 2,000 Libyan prisoners of war who had been held in Chad
since the end of hostilities three years ago.

Meanwhile, the US State Department said yesterday that it would not formally
recognise the new government in Chad.

It has accused the new regime of being backed and financed by Libya, but the US
statement did say that Washington would maintain regular diplomatic contacts.


GRAPHIC: Map, no caption

                   Copyright 1990 The Financial Times Limited

                             2560 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            December 3, 1990, Monday

World News in Brief;
Chad leader 'dead'

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 52 words

Libya's official news agency JANA reported yesterday that Chadian President
Hissene Habre had been killed as he tried to flee victorious rebels. In a report
from the Chadian capital N'Djamena, it quoted 'informed sources' as saying
reports that Habre arrived safely in neighbouring Cameroun were untrue.


                   Copyright 1990 The Financial Times Limited

                             2561 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           November 30, 1990, Friday

French reinforcements for Chad


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 53 words

France is to reinforce its military contingent in Chad after fighting spread in
the east of the country, writes George Graham in Paris. France already has
around 1,000 military personnel in Chad as part of an operation begun in 1986 to
help the government of President Hissene Habre stave off an attack by Libya.


                   Copyright 1990 The Financial Times Limited

                             2562 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           November 23, 1990, Friday

The Thatcher Resignation;
US tries to tune into new voice of Britain



LENGTH: 658 words

All the potential successors are virtual unknowns to Americans, writes Peter

A WHITE HOUSE official in Saudi Arabia called it 'a bad day for Britain' on
hearing yesterday that Mrs Thatcher intended to resign.

She has become so much the face and voice of Britain - 'Thatcher's Britain' -
over the past decade that her departure is a profound shock in the US, not least
because the seriousness of her political troubles only began to be appreciated a
few days ago.

Moreover, all her potential successors are virtual unknowns to the American
public. They are scarcely better known in Washington, though Mr Douglas Hurd is
increasingly respected by US foreign policy-makers, and Mr John Major, as
chancellor, has established a rapport with the USreasury. Mr Michael Heseltine
is known mainly by those few who remember his opposition to a US solution to the
Westland crisis.

Many Americans do not understand why Mrs Thatcher has had to go. They have been
puzzled about why someone who has such a formidable international reputation
should be turned out. They have not taken on board until now the extent of her
domestic unpopularity.

This has been reinforced by frequent American misunderstanding about the
workings of the parliamentary system, so unlike the US model.

The immediate American worry is naturally about the Gulf. Mrs Thatcher has been
the staunchest, and most hawkish, supporter of President George Bush's policy,
and he has frequently acknowledged the importance of her backing.

While all three candidates for the leadership are behind current US Gulf policy,
the removal of Mrs Thatcher will inevitably mean a difference of tone and style.
A successor will probably talk in less bellicose language and will certainly not
have the influence of Mrshatcher with American and international opinion. Mr
Bush has lost a central public prop.

More generally, Mrs Thatcher has always been much more of an Atlanticist than a
European. All three candidates for the Tory leadership will be seen in the US as
more European in their outlook.

However, this shift should not be overestimated. Mrs Thatcher's language - and
her undoubtedly close personal friendship with former President Ronald Reagan -
has fostered illusions in Britain about transatlantic relations and has masked
existing changes.

The term 'special relationship' has always confused more than it has clarified.
It has meant less in American eyes than the romantic notions of an
English-speaking partnership fostered by Mrs Thatcher and Conservative
anti-Europeans. Washington increasingly views Britain as one among a number of
medium-sized powers, and the State Department has been irritated by the UK's
lack of influence over European Community decisions. It is better to have a
friend on the inside than on the outside.

Yet there is undoubtedly a special relationship between Britain and the US on
defence and intelligence matters, dating back to the wartime alliance. Foreign
policy-makers from both countries work closely together, sharing information and
views, in the way that the US and its other allies do not.

In times of crisis, such as the bombing of Libya 4 1/2 years ago and the present
crisis in the Gulf, Washington has generally been able to count on public
support, or at any rate acquiescence, from London. The only exception was during
the Edward Heath years from 1970 to 1974.

The departure of Mrs Thatcher will, none the less, raise questions for many
Americans about British policy - and a new prime minister would be well advised
to come to Washington soon.

Apart from providing reassurance on the Gulf, the new leader will also need to
explain to Americans how far he will change the Thatcher legacy.

For many Americans, notably conservatives and including many businessmen who
invest in Britain, Mrs Thatcher has personified the political and economic
renaissance of Britain.

They see her critics as wanting to return to the 'bad old days' of the 1970s and
will now be worried about what her successor will do.


                   Copyright 1990 The Financial Times Limited

                             2563 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          November 21, 1990, Wednesday

Turkish Finance and Industry 7;
Building on advances in expertise - Construction



LENGTH: 1158 words

CONTRACTORS have had to adapt to changing circumstances and markets more than
any other corporate sector in Turkey over the past 10 years. First the Middle
East, then the domestic infrastructure rise, and latterly the Soviet Union, have
been their moving targets.

New contracts won in 1989 and 1988 still notched up to a considerable Dollars
2bn, while orders in the pipeline, both committed and potential, total Dollars
6bn and work in progress, Dollars 4bn.

Several Turkish companies have been hard hit by their exposure in Iraq and
Kuwait, where most were uninsured. Estimates of losses total about Dollars 800m.
Enka Insaat had Dollars 344m worth of exposure, much of it on the large Bekme
dam scheme close by the Iranian border in the north. In Kuwait, BMB had just
started work on what was claimed to be the largest single civil engineering
contract ever in the region, for the Shuaiba power station.

In the wake of the crisis, Gulf prospects have nosedived for Turkish
contractors. But strong markets remain in other Arab countries - Libya, in spite
of the trials of other companies, has always provided a steady stream of work
for Sezai Turkes-Feyzi Akkaya (ST-FA) without complications, says board member
Mr Kamuran Gurun. A large source of work recently has been the Giant Man-made
River (GMR) scheme transporting water from distant desert aquifers to industry
and farmland on the Mediterranean coast.

Tripoli this year also rehabilitated Turkish banks, discredited in the early
1980s by the alleged defaulting by some institutions on performance bonds for
contracts failed by undercapitalised and inexperienced Turkish companies.

Turkish contractors as a body entered the Middle East comparatively late after
the Koreans in the early 1980s. But the region served as a training ground for
the domestic infrastructure construction spree in the mid-1980s unleashed by the
rapid development policies of the conservative Motherland Party and its leader,
the then prime minister and now president, Mr Turgut Ozal.

Economies forced by the profligacy of an election year in 1987 cut down
radically on the number of new projects coming to the market, but a substantial
carry through remains. 'The government is still moving fast on infrastructure
construction, which it sees as its first duty,' says Dr Uzeyir Garih, chief
executive officer of the Alarko group of companies.

But public works expenditure has been blamed by some critics as one of the prime
engines of high inflation. The large toll motorway construction programme is
looked on askance by the World Bank, for example, which believes the money might
be better spent elsewhere. About 2,000 km in sections of toll motorways are
under construction, both as transit trade routes to the Middle East, and to open
up the Anatolian interior for industry and agriculture. Beginning with the
second Bosporus bridge in 1985, now built, the contracts are largely due for
completion in the early 1990s. About Dollars 1.5bn will be spent on the
programme this year, and probably as much again in 1991.

Much of it will be funded internally by the government's Public Participation
Administration, because the work has considerably expanded from two to four-lane
carriageways since the contracts were first awarded on the strength of foreign
export credit in the mid-1980s. For example, a contract awarded to a group led
by Tekfen, the contracting company, for sections between Tarsus and Gaziantep in
the south-east has risen from Dollars 360m to Dollars 1.2bn in value.

Another heavy drain on the exchequer has been the big Ataturk dam in the
south-east, although its large embankment impounding the Euphrates river is now
mostly in place. Big contracts have also been awarded this year for the erection
of high-voltage electricity transmission lines across Anatolia from the Ataturk
dam's 2,400MW generating capacity.

The budgetary squeeze threw more emphasis on the novel, 'build-operate-transfer'
(BOT) contracting method pioneered by theurkish government, which involves
farming out the financing and construction of large utilities to private sector
groups. Though first broached in the mid-1980s, contractors express
disappointment with concrete results from BOT in Turkey so far. Not one large
scheme is yet off the ground compared with other developing countries such as
Malaysia which have adopted and implemented the idea.

However, BOT contracts could be signed up soon for a hydro-electric dam at
Birecik downstream of the Ataturk dam, and a world trade centre and new foreign
airlines terminal at Istanbul's Ataturk international airport. But banks and
contractors have serious doubts about government support for Istanbul
municipality's grandiose BOT project for a tube crossing of the Bosporus
connected to the first stage of a metro system on the European side.

At the same time, the government is pushing rapidly ahead with the first Dollars
1bn stage of a scheme which eventually could cost up to Dollars 5bn to relieve
the ancient city's chronic water supply deficiencies, exposed by prolonged
drought this year to the further detriment of the unpopular, social democrat
mayoralty. Completion of the first stage piping water along the eastern Black
Sea coast from the mouth of the Melen river is scheduled just before the next
general election in 1992.

The most tangible growth area for leading Turkish companies lies abroad again,
in the Soviet Union, where a substantial bridgehead has been established within
the terms of payment annually for imports by Turkey of Soviet natural gas. A
quarter of the bill for the gas is met by contracting services, for which awards
so far have totalled Dollars 228.5m.

In Turkey itself, the natural gas import programme has created a plethora of
work in transmission and distribution pipelines, with the next large project a
Dollars 270m scheme build a large gas reservoir under Tuz Golu, the central
Anatolian salt lake.

Finding the gas deal insufficient, Turkish companies have branched out as
subcontractors or partners to Soviet or Western companies. Contracts may also
start to flow soon from a Dollars 350m line of project finance from the Turkish
Export Credit Bank (Eximbank) for light industrial plants in the Soviet Union.

There seem to be no limits, apart from market opportunities, on whereurkish
contractors are prepared to go - one even recently submitted the lowest price in
a tender competition for a large office block in New York. Tekfen, for example,
is looking at jobs in places as far apart as Pakistan, India, the Soviet Union,
Afghanistan, Czechoslovakia, and Bulgaria.

Turkish companies have come a long way in terms of management and technological
expertise during the last 10 years, according to Mr Murat Gigin, who heads
Tekfen's construction operations. 'European companies have come to work in
Turkey', he says. 'There's no reason why we shouldn't seek contracts in their


GRAPHIC: Picture, The South-eastern Anatolia Project is the largest
enterprisecarried out in Turkey. The region borders Syria and Iraq

                   Copyright 1990 The Financial Times Limited

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                        Financial Times (London,England)

                          November 15, 1990, Thursday

The Middle East;
Prospects fade for Arab summit

BYLINE: VICTOR MALLET, Middle East Correspondent

SECTION: SECTION I; Overseas News; Pg. 7

LENGTH: 333 words

PROSPECTS for an Arab summit to discuss the Gulf crisis faded yesterday when
Saudi Arabia and Iraq attached diametrically opposed conditions to any such

Prince Saud al-Faisal, the Saudi foreign minister, said a gathering would be
fruitless unless Iraq agreed to abide by international and Arab League
resolutions calling for an Iraqi withdrawal from Kuwait.

The Middle East has been humming with diplomatic activity since King Hassan of
Morocco proposed a summit as a 'last chance' to avert war. President Mubarak of
Egypt was due to arrive in Syria yesterday after a trip to Libya.

Differences between Iraq and its Arab enemies in the Gulf hinge on the previous
Arab summit in Cairo in August, when 12 of the 21 league members demanded an
Iraqi withdrawal and agreed to send Arab troops to defend Saudi Arabia.

Prince Saud, speaking during a surprise visit to the United Arab Emirates,
said:'It is necessary for Iraq to announce its agreement on the Cairo summit
decisions and (UN) resolutions.' But Mr Taha Yassin Ramadan, the Iraqi first
deputy prime minister sent to Morocco by President Saddam Hussein, said the
proposed meeting should 'wipe off the resolutions of the infamous Cairo summit'.

The two camps also differ on the issue of 'linkage'. Mr Saddam wants a solution
to the Gulf crisis to be linked to the Arab-Israeli conflict, but the Gulf
states want him to withdraw from Kuwait unconditionally, immediately, and
completely, leaving the Palestinian problem until later.

President Saddam, mean-while, has removed his relative, Mr Ali Hassan al-Majid,
as governor of Kuwait and replaced him with Mr Aziz Saleh al-Nouma, another
senior Baath party official.

It is thought that Mr al-Majid, far from being discredited, will return to his
job as minister of local government after ruthlessly suppressing the Kuwaiti

He was governor of Kurdistan when Iraqi forces used poisoned gas to kill
hundreds of people in Halabja during the Gulf war in 1988.


                   Copyright 1990 The Financial Times Limited

                             2565 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          November 14, 1990, Wednesday

Gulf crisis may boost NZ meat sales


SECTION: SECTION I; Commodities & Agriculture; Pg. 32

LENGTH: 524 words

THE FIRST consignments of New Zealand frozen lamb to Iraq in four years was
shipped only a few weeks before the Gulf crisis erupted. It was prepaid and
landed at the Jordanian port of Aqaba just as the imposition of Uinted Nations
sanctions ended any hope of repeat sales. Kuwait has also been lost to the New
Zealand meat exporters because of the crisis, but that was a much smaller
market, taking only about 300 tonnes of lamb a year.

However, the overall effect of the Gulf crisis could actually be a boost to
exports of New Zealand meat to the Middle East.

The New Zealand Meat Board expects countries bordering the troubled area
steadily to increase their imports in coming months to feed their armies,
provide for a growing population and build up stocks as a form of 'food

The Middle East is again becoming an increasingly important market for New
Zealand meat, especially lamb. In the l988-89 season the region bought just over
100,000 tonnes of New Zealand lamb, mutton and beef, including 93,973 tonnes of
lamb, 29 per cent of the country's total lamb exports.

New Zealand and Australia dominate meat exports to the Middle East with New
Zealand providing 73 per cent of the 138,000 tonnes sold there by the two
producer countries last year.

Sales to Iran, which have had a chequered history, seem set to once again become
extremely important for New Zealand. A few years ago Iran became New Zealand's
largest single lamb customer, with imports of well over 100,000 tonnes. The Gulf
War and Iran's economic problems saw sales fall away to zero in the 1989-90

In July this year the New Zealand Meat Marketing Corporation signed a contract
to supply up to 40,000 tonnes of lamb to Iran. This will be shipped out of the
new season's lamb crop. The price, although not revealed, is said to be 'very
satisfactory' for New Zealand. Total shipments are likely to exceed the
40,000-tonne level during the coming year with Iran certain to be New Zealand's
biggest Middle Eastern customer.

Most of the 10,217 tonnes of New Zealnd meat shipped to Jordan is to fill armed
forces' contracts and exporters believe increased sales are possible.

Meat exporters believe the Gulf states and Middle East countries will increase
meat imports. These could be funded by rising oil prices. Increased population
in all Middle East countries will also put pressure on domestic food production
and imports of lamb, a traditional Arab food, could benefit.

Markets such as Oman, Libya and Algeria could divert some of their increased oil
revenues to pay for increased imports of meat and indeed the two latter
countries have already indicated to New Zealand suppliers their wish to do so.

The Middle East has been a big market for live sheep exports with Australia
shipping about 6.3m head and New Zealand 500,000 over the past few years. In
September New Zealand sent about 100,000 live sheep and lambs to Saudi Arabia.
Exporters believe shipments of live sheep will decline in favour of more frozen
and chilled meat, particularly because in the current volatile situation live
sheep are more vulnerable than frozen carcass.


                   Copyright 1990 The Financial Times Limited

                             2566 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          November 14, 1990, Wednesday

Saddam said to favour 'last chance' summit

BYLINE: VICTOR MALLET, Middle East Correspondent

SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 320 words

IRAQ suggested yesterday that it might attend a 'last chance' Arab summit
proposed by King Hassan of Morocco to resolve the Gulf crisis, as Arab diplomacy
gathered pace in an attempt to avert a war.

President Saddam Hussein of Iraq - who was quoted by the Iraqi news agency on
Monday night as saying that Iraq was ready to make sacrifices for the sake of
peace - sent Mr Taha Yassin Ramadan, his first deputy prime minister, to Morocco
with a letter for the king.

President Hosni Mubarak of Egypt, one of Mr Saddam's principal foes, made an
unannounced visit to Libya and met Col Muammer Gadaffi, the Libyan leader.

The divisions in the Arab world over Iraq's invasion of Kuwait in August are so
deep that the summit may never even take place, let alone agree on a common

Kuwait's government-in-exile, along with its Arab allies, is noticeably
unenthusiastic about a meeting which would in any way legitimise Mr Saddam or
allow him to play for more time by linking an Iraqi withdrawal to a settlement
of the Arab-Israeli conflict.

Iraq and its supporters, on the other hand, insist that the planned summit must
endorse linkage and avoid making demands for an unconditional Iraqi withdrawal.
Mr Saddam wants the venue to be a sympathetic capital such as Amman.

Twelve of the 21 members of the Arab League voted to condemn the Iraqi invasion
at a summit in Cairo on August 10, and they agreed to send troops to protect
Saudi Arabia.

Forces from Egypt, the Gulf states, Syria and Morocco are alongside US troops.

Mr Ramadan was quoted by the Iraqi report as saying that Iraq wanted a summit to
meet the 'aspirations of the Arab peoples and not a gathering to plot against
the nation as happened at the conspiratorial Cairo summit'.

In Turkey, a captain who defected from the Iraqi army claimed Mr Saddam had
executed six generals and 120 other officers, apparently for opposing the


                   Copyright 1990 The Financial Times Limited

                             2567 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           November 13, 1990, Tuesday

UK orders Iraqi out in tit-for-tat expulsion


SECTION: SECTION I; Back Page; Pg. 24

LENGTH: 295 words

BRITAIN has expelled an Iraqi diplomat in retaliation for the expulsion by Iraq
of a second secretary at the British Embassy in Baghdad, the foreign office
announced in London yesterday.

Mr James Tansley, a press attache at the Bagdhad embassy, was told last Friday
that he had 10 days to leave Iraq. In response, Britain has ordered a second
secretary at the Iraqi Embassy in London, Mr Wajdi Marjan, to leave the the

The Iraqi authorities accused Mr Tansley of making remarks about President
Saddam Hussein while addressing a crowd, which they considered to be
'inappropriate to that job', the foreign office said.

This is the first tit-for-tat expulsion of diplomats from the two countries
since Britain ordered Iraq's military attache and his staff to leave the country
in September.

That expulsion, matched by the Iraqis, followed the violation of the French
Embassy in Kuwait by Iraqi troops.

Meanwhile, the European Community yesterday set in train a broad diplomatic
initiative to release the remaining 4,000 western hostages in Iraq.

At a meeting in Brussels with their counterparts from Algeria, Libya, Morocco,
Mauritania and Tunisia, EC foreign ministers urged the Maghreb states to press
Iraq to allow UN representatives to negotiate the release of the hostages.

Alison Smith in London writes: Mrs Margaret Thatcher, the prime minister, said
in London yesterday that a failure to act decisively to free Kuwait would only
leave the problem for future generations.

In her speech at the annual Lord Mayor's banquet, she said: 'We hope that
sanctions will compel Iraq to withdraw soon. But if not, Arab and Western forces
will have no alternative but to free Kuwait by military means'.

Arab summit, Page 6

Foreign Affairs, Page 23


                   Copyright 1990 The Financial Times Limited

                             2568 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           November 12, 1990, Monday

The Middle East;
EC to launch drive to win hostages' release


SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 375 words

THE European Community is today expected to launch a diplomatic drive to
persuade Iraq - through third parties - to let UN representatives go to Baghdad
to negotiate for the release of western hostages.

EC foreign ministers will make an immediate start to their new strategy of
mounting maximum pressure on Iraq to accept UN mediation on the hostages, when
they meet with their counterparts from the Arab Maghreb later today in Brussels.
At least two Maghreb states - Algeria andunisia - are considered sympathetic to
Baghdad and may have some influence.

Last week political directors in the 12 EC foreign ministries agreed the best
way of putting an end to Iraq's divisive tactics of dealing with freelance
western emissaries was to get the UN involved. So far the Iraqi government has
refused to talk about hostages with any UN representative, because of the world
body's repeated resolutions demanding an Iraqi pull-out from Kuwait.

To get Baghdad to change its mind, the EC should now approach any and all
conceivable intermediaries, in the Arab or Moslem worlds or in the non-aligned
movement, the political directors suggested.

Today's meeting with Maghreb ministers, in the midst of the regular EC foreign
ministerial council, is made very timely by the Gulf crisis, but has been long
planned. The five Maghreb states, Mauritania, Morocco, Algeria, Tunisia and
Libya, will want to hear what EC governments think of the European Commission's
plans to double grants, increase loans and improve market access for countries
around the Mediterranean rim.

These Mediterreanean plans are, however, bogged down in an internal EC argument
that will not be resolved today. Northern EC states favour trade rather than aid
(coming mostly out of their pockets), while southern EC states prefer aid rather
than trade (competing mostly with their products).

The EC is generally ready to help the Maghreb integrate in its own image, even
though one of the Maghreb states, Libya, has no relations with either the EC or
the UK. Britain has said it will block any aid specifically earmarked for Libya
in advance of Tripoli publicly renouncing its attitude to terrorism, but has no
objection to Libya indirectly benefiting from technical EC aid.


                   Copyright 1990 The Financial Times Limited

                             2569 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           November 12, 1990, Monday

Chad border clash

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 26 words

Chad said it had routed 2,000 members of the Libyan-backed Islamic Legion during
24 hours of fighting near the Sudan border. Libya denied involvement.


                   Copyright 1990 The Financial Times Limited

                             2570 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           November 6, 1990, Tuesday

Malta embraces a market culture


SECTION: SECTION I; European News; Pg. 3

LENGTH: 806 words

Richard Evans and Godfrey Grima on efforts to attract investment

MALTA, with few natural advantages apart from its strategic position and plenty
of sunshine, is embarking on a fresh bid to attract industry and investment.

The island's difficulties are readily apparent; it is tiny, with a population of
under 350,000, and it is trying to compete with the expanding, low-cost
economies of south-east Asia and north Africa on the one hand, and with the
developed world on the other.

Furthermore, it has not always done its own cause much good in the past.
Memories of the bruising conflicts between the British and the autocratic,
confrontational premier Dom Mintoff in the 1970s remain vivid, and the
controversial defence and commercial links with Colonel Gadaffi's Libya made
Malta the subject of US suspicion and hostility.

All that has changed, first with the substitution in 1984 of Mr Mintoff as
Labour leader by the more conciliatory Dr Carmelo Mifsud Bonnici, and then with
the accession to power in 1987 of the Nationalist, or Christian Democratic,
government of Dr Eddie Fenech-Adami.

Relations with Libya, although still close commercially, are at arms length
politically, and the emphasis in external relations is now firmly away from the
former communist bloc and towards the west. Malta has applied to join the
European Community and negotiations are expected to start by 1993.

But leading Maltese politicians and businessmen concede that the image of a
polarised, sometimes violent, country with unsavoury allies has not been easy to

The planned transformation by Dr Fenech-Adami of an over-protected, state
dominated economy into one that can compete on the world market has made
painfully slow progress.

The first priority was to improve the creaking infrastructure. A big capital
programme was launched to overhaul the telecommunications network and to build a
new power station, desalination plants and a second airport terminal.

This programme is largely completed and the emphasis is now turning towards
attracting higher skill industries like electronics, auto components, medical
instruments, pharmaceuticals and information technology to take the place of
more traditional employers like textiles, the viability of which is being
threatened by low-cost competition from north Africa.

There is already a competitive package of incentives in place involving a
10-year tax holiday for incoming export-orientated companies, ready-built
factories at subsidised rents, and training grants.

The task of marketing the island is the responsibility of the Malta Development
Corporation. Mr John Dalli, the Minister for Economic Affairs, has appointed
Professor Joe Bannister as chairman of the MDC, based partly in Malta and partly
in London.

The key element in the new strategy is the development of a network of contacts,
particularly in the US and Europe. These intermediaries will spotlight companies
and help vet them at an early stage, so that scarce resources can be

In London, the main international office of MDC, the adviser is Mr Arno Nash,
who has wide knowledge of electronics manufacturing and who set up factories in
Malta for General Instruments and for Toko, a Japanese manufacturer.

There is a special arrangement in the US, where Mr David Diebold, formerly a
senior adviser to the Reagan administration, and the Washington legal firm of
Dechert Price Rhoads have been contracted to seek out business from US
companies. The firm will get paid by results, with a 2 per cent commission on
net investments up to a maximum of Dollars 100,000 per contract.

Similar arrangements are being worked out for western and central Europe, with
an agent based in Germany, which has traditionally been Malta's most active
investor. 'This concentration of effort will gain great credibility if we can
achieve the first results quickly. It looks very promising,' says Prof

The next stage of the plan will be to develop a science park next to Malta's 400
year old university outside Valletta. There is finance available for the
building over the next 18 months of 60 to 70 manufacturing units to enable high
technology companies to develop their own research and development facilities on
the island.

Tourism will continue to be Malta's biggest revenue earner for the foreseeable
future, but it too is subject to fashion and adverse economic pressures as well
as being seasonal. The government's intention is to generate permanent
high-skill jobs that will guarantee employment and bring the economy up to
western European standards.

To the visitor to Malta, the optimism and confidence have a familiar ring, but
over the last few years the high hopes of successive governments have only
intermittently been fulfilled. This time the Libyan ghost appears to have been
exorcised and there is a more coherent strategy in place.


                   Copyright 1990 The Financial Times Limited

                             2571 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           November 1, 1990, Thursday

Libya expels PLF

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 33 words

Libyan leader Muammer Gadaffi has expelled the Palestinian Liberation Front, led
by Abu Abbas, which threatened to attack US interests because of the Gulf
crisis. The PLF said it was 'shocked'.


                   Copyright 1990 The Financial Times Limited

                             2572 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          October 24, 1990, Wednesday

Gas industry changes in the pipeline


SECTION: SECTION I; Commodities & Agriculture; Pg. 32

LENGTH: 1037 words

Steven Butler reviews a book calling for an increase in competition

EUROPE's natural gas industry is unlikely to be pleased by the publication
yesterday of Mr Jonathan Stern's book European Gas Markets.

Mr Stern, head of the energy and environmental programme at the Royal Institute
of International Affairs, is one of just a handful of independent experts on the
industry. As such he has credibility when he calls for more competition among
gas suppliers in the liberalised environment of a single-market Europe. This
could signal big changes ahead for the industry.

Opportunity for growth in the industry over the next two decades is exciting, Mr
Stern argues, with the potential for gas to double its share in the energy
market. This could happen because gas is abundant and has fewer environmental
detractions than any of the competing fuels.

At the same time, he says, rapid growth in gas consumption is not a foregone
conclusion. The industry will have to meet several important challenges,
including arranging for secure supplies from outside the European region and
adapting to a more competitive market.

For several years, the gas industry has lobbied hard in the European Commission
against any moves to promote gas-to-gas competition within the industry, on the
American or British pattern. Currently, pipeline operators on the Continent
operate, de facto or de jure, territorial monopolies on gas distribution. They
generally buy all the gas that passes through their pipelines and then sell it
on to other distributors or consumers.

The only competition is provided by alternative fuels, such as coal or oil

The European Commission has been toying with the idea of promoting competition
by forcing pipelines to transport gas for others for a fee, thereby, giving
consumers a choice of suppliers.

Against this the industry has assembled a range of powerful arguments.he most
important of these is that if pipelines loose the security of their markets they
will:firstly, be unable to meet contractual obligations to purchase gas from
producers in, say, the Soviet Union or Norway, and;

secondly, they will be unable to finance multi-billion dollar pipeline and gas
development projects unless they can be sure other gas suppliers will not take
their markets away.

Mr Stern accepts these arguments, unlike the European chemicals companies, which
have been the biggest proponents of change. He still advocates reform but wants
pipelines to be opened only in a manner that neither forces them to abrogate
current contracts nor prevents them financing large, new infrastructural

According to this idea, pipelines should be required to carry gas for others
when they have spare capacity, the use of which would not threaten existing
contracts. A more radical solution, Mr Stern suggests, would be to declare
pipelines 'open-access', or available for third party use, after the expiry of
initial term contracts that underwrote construction of the line.

He notes, however, that any move to open the pipelines would require a
regulatory system with teeth. He cites the UK experience with the Office of Gas
Supply to argue that such a system need be neither large nor cumbersome. Yet
opponents will dredge up the case of the US to argue that creeping regulation,
once started, will undermine the industry's foundations and grow to unwieldy

Aside from regulatory issues, Mr Stern points out that the projected demand
increase for all Europe from 370bn cubic metres in 1989 to 650bn cu m in 20
years, would require new sources of supply in areas now considered politically

'Non-European suppliers would account for more than half of total demand by 2010
and the USSR on its own for nearly one-third.' Supplies are abundant in Siberia,
Africa and the Middle East, but all would require transit across potentially
unstable areas, raising important security issues.

Mr Stern also argues that the industry will become more pluralist with the
arrival of power generators purchasing large volumes of gas and independent
companies laying new pipelines. 'The situation which has evolved over the past
two decades, where one or two individuals in a handful of companies take
virtually all decisions of any consequence for the industry, is not likely to
continue under conditions of large-scale market expansion.'

European Gas Markets, however, is not primarily a polemic tract, but rather a
concise history of the gas industry in Europe and the prospect for its continued
development. Mr Stern even jokes that he has spent his professional life as an
expert on 'the boring fuel', for which he foresees a future that is anything but

European Gas Markets: Challenge and Opportunity in the 1990s. Royal Institute of
International Affairs. Published by Gower Publishing Company, Gower House, Croft
Rd, Aldershot, Hants GU11 3HR. Price, Pounds 25.00.

Natural gas reserves of major current and potential producers and
exporters to Europe
Country          Proven      Probable     Proven       Probable
                 reserves    reserves     reserve      reserve
                 (bn cu m)                life*        life*
UK                   590       1,765         13           40
Norway             2,250       3,000         80          107
Netherlands        1,730       1,877         26           28
Germany              188                     11
Italy                290                     17
Romania              162                      5
Soviet Union      40,000**    60,000         52           78
Algeria            3,700       5,000         82          111
Libya                722                     82
Nigeria            2,476                     52
Iran              14,200                    710
Qatar              4,621                    714
Abu Dhabi          5,180                    401
 *In years: reserves divided by 1988 production. **Lower estimate.


GRAPHIC: Table, no caption

                   Copyright 1990 The Financial Times Limited

                             2573 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            October 22, 1990, Monday

California 6;
Hollywood takeover fever



LENGTH: 1319 words

Alan Friedman tours the film lots in America's Tinsel Town

THE big story in Hollywood these days is foreign investment, pure and simple.
The flow of foreign billions into the US entertainment industry continues apace,
with the latest round of talks - concerning a possible Dollars 7bn takeover of
Hollywood's MCA by Matsushita of Japan - under way. The rationale for foreign
interest in the US entertainment business may vary from company to company, but
in basic terms it is clear US pop culture is in greater demand the world over
than ever before and only Hollywood can supply the mass-audience product. In
addition, the US view is that only by consolidating the entertainment business
into a handful of multinational and multi-media integrated conglomerates can the
rising costs of production and marketing be met sufficiently to make the
business profitable.

Two years ago Sony of Japan paid the equivalent of more than Dollars 5bn to
acquire Columbia Pictures and film producers Peter Guber and Jon Peters to run
the studio. That deal followed a previous Dollars 2bn takeover of CBS Records by
Sony, meaning the Japanese consumer electronics group has spent a staggering
Dollars 7bn on US entertainment industry acquisitions in less than three years.

Mr Rupert Murdoch, meanwhile, acquired Twentieth Century Fox and not only
breathed new life into the Hollywood studio - under the leadership of Mr Barry
Diller - but also expanded into mainstream US television. The Fox network, a
fledgling US nationwide television network, has proven an incredible success in
less than a year, offering blockbuster hits such as The Simpsons, an animated
show, and a variety of low-brow tabloid television products that may offend the
intellect, but fill the purse. What is most striking about Fox is that it has
actually challenged the traditional titans of the industry - the ABC, NBC and
CBS television networks - for audience share.

Mr Murdoch has also thrown his lot in with NBC Television and other partners to
try and develop a Dollars 1bn Sky direct broadcast satellite US system, a larger
version of his UK project. The synergies of having mass broadcasting, video and
pay-TV outlets along with a Hollywood studio for film and television programme
production are not exclusive to Twentieth Century Fox. Every major studio wants
the same.

Aside from the Sony and Murdoch acquisitions there are two other non-US
investors ready to step into the picture and buy two more legendary Hollywood
studios - Metro-Goldwyn-Mayer/United Artists (MGM/UA) and MCA, the parent of
Universal Pictures and MCA Records. The more controversial of the two would-be
foreign buyers is undoubtedly Mr Giancarlo Parretti, the convicted Italian
financier who has until tomorrow to make good a Dollars 1.3bn takeover of
MGM/UA. Mr Parretti's vehicle is Pathe Communications, the rump of the former
Cannon Pictures that used to belong to Mr Menahem Golan and Mr Yoram Globus, two
Israeli B-movie-making cousins.

Mr Parretti was convicted in Naples earlier this year on charges of fraudulent
bankruptcy and sentenced to nearly four years in prison, but this has not
stopped the man. He is appealing the prison term even as he jets between his
Dollars 9m mansion in Beverly Hills and his political and business cronies in
Italy and France. Mr Parretti's main partner and financial backer is Mr Florio
Fiorini, a Geneva-based Italian whose past includes controversial stints as the
finance director of ENI, the Socialist-controlled Italian state energy concern,
and work as an adviser and deal-maker for Libya's Colonel Muammer Gadaffi.

The seller of the troubled MGM/UA is Mr Kirk Kerkorian, the reclusive
Armenian-American casino and hotel mogul who has sold and re-bought MGM/UA
assets so many times in the past 20 years that the studio now resembles a barrel
of broken assets more than a functioning film entity.

More significant and less controversial than the Kerkorian-Parretti show is
Matsushita's interest in buying MCA. MCA last spring embarked upon an expensive
acquisition trail itself, paying the equivalent of Dollars 545m in stock to buy
the David Geffen Company, possibly the most successful independent recorded
music business in the world. Mr Geffen had an important European record
distribution deal with Time Warner's WEA subsidiary that expires in December -
he recently told the Financial Times that negotiations are under way with
various potential successors to WEA, including the likely favourite, BMG, the
music subsidiary of Germany's Bertelsmann group.

The interest by Matsushita for MCA mirrors the Sony-Columbia deal in many ways.
Both Sony and Matsushita are producers of electronics hardware such as video
cassette recorders. Both are keen to integrate their businesses with the
software side - which in this case means Hollywood movies, television shows and
videos from historic archives of film titles.

All the actual and potential foreign investors - Sony, Matsushita, Murdoch and
Parretti - have another priority item on their collective agendas. This is the
desire to feed Hollywood products to the booming European and Asian markets for
film and music entertainment. Many US movies will now take as much as 50 per
cent of their gross box office receipts outside the United States and the need
to internationalise is a business necessity for the 1990s and beyond. The
deregulation of European television and the rise of private commercial
television tycoons such as Mr Silvio Berlusconi of Italy has fuelled demand for
Hollywood products.

Mr Jeffrey Logsden, a leading entertainment analyst at the Los Angeles firm of
Seidler Amdec, says all factors bode well for Hollywood, which is using ever
greater amounts of capital as movie budgets of Dollars 40m to Dollars 60m become
the norm. For the Japanese hardware companies the issues are how to spur more
revenue growth and where to re-invest.

The opening of new markets such as cable, direct broadcast satellite, free
private television in Europe and more mean that there is likely to be continuing
foreign interest in major acquisitions and smaller independent production deals,
Mr Logsden says. Examples of these smaller deals include the recent sale by
Carolco Pictures, the maker of the Rambo series of films, of a 10 per cent
equity stake to Pioneer Electronics of Japan and 5 per cent to Canal Plus, the
leading pay-TV network in France.

In the US, the big merger was last year's Dollars 14bn combination ofime and
Warner Communications, resulting in the world's biggest entertainment
conglomerate. Warner Brothers remains a force to be reckoned with in Hollywood,
as does the HBO cable entertainment movie network and the WEA and other record
labels. The Time Warner stable also includes Time magazine and numerous other
publishing interests. But Time Warner has a fundamental problem - it is called

The Time Warner deal left the group with more than Dollars 10bn of debt and this
in turn has produced net losses in spite of the underlying profitability of most
operating subsidiaries. What to do? Mr Steve Ross, the flamboyant Time Warner
chairman, recently claimed he was not worried, but Wall Street has its doubts.
Paramount Communications, another big US entertainment company, has a different
problem. Mr Martin Davis, the Paramount chief, last year raised Dollars 1.2bn
through the sale of The Associates, a financial services subsidiary. Now he is
desperate to make an acquisition in the entertainment industry. Meanwhile,
Disney has been enormously successful in building a serious movie production
business that goes well beyond the traditional Mickey Mouse image of children's
entertainment. It is said that Disney would like to buy a television network,
but US laws on the syndication of television shows remain clouded and a debate
is raging on their revision.

All in all the message from Tinsel Town is that more money is likely to change
hands, and billions of it.


                   Copyright 1990 The Financial Times Limited

                             2574 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           October 18, 1990, Thursday

Tough policy

SECTION: SECTION I; Observer; Pg. 20

LENGTH: 209 words

The top people of the insurance industry are known for their enthusiasm for
renewing business contacts over a cocktail or two at conferences in exotic

Nevertheless, the Arab Maghreb Symposium on Oil Insurance next month threatens
to pose an endurance test.

The subject matter for the meeting could not be more topical. It is a study of
the risks involved in the oil industry. And papers will be presented on a host
of useful topics, including risk management in the oil business, loss
prevention, and insuring oil and gas installations.

But the venue for the event, is proving less than congenial to brokers and

The host, the Libya Insurance Company, is planning to hold the symposium in the
'petro-chemical complex city' of Ras Lanuf which is some 450 kilometres along
the coast road east of Tripoli.

That is a part of the world where the desert sands are rarely if ever disturbed
by Europeans these days, apart from a few archaeologists on their way to visit
the incomparable Roman and Byzantine ruins of the city of Leptis Magna.

The Risk and Insurance Managers Society of America is showing a keener eye for
public relations, meanwhile. Its annual convention next year will be held in
Disneyland, California.


                   Copyright 1990 The Financial Times Limited

                             2575 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           October 13, 1990, Saturday

Libyan deal for Lasmo


SECTION: SECTION I; UK Company News; Pg. 10

LENGTH: 137 words

LASMO, the UK independent oil company, is to begin oil exploration in Libya next
year in a consortium with a number of South Korean partners, writes Steven

The deal appears to be the first time a Western oil company has re-entered Libya
since 1986, when a US presidential order banned US oil companies from activities

It is part of a growing trend in which members of the Organisation of Petroleum
Exporting Countries are inviting foreign companies to participate in oil
exploration and production.

Lasmo will operate and hold a 50 per cent interest in the venture, which
includes onshore and offshore exploration acreage. Mr Chris Greentree, Lasmo's
chief executive, said the exploration blocks offered 'a range of promising
exploration plays in basins of proven significant petroleum potential.'


                   Copyright 1990 The Financial Times Limited

                             2576 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           October 11, 1990, Thursday

Syria-Lebanon pipeline reopens


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 253 words

THE Lebanese Government has finalised an agreement with the Syrian petroleum
office to purchase 8 per cent of Syria's oil output.

The contract marks the re-opening of the pipeline between Banias in Syria to the
north Lebanon port of Tripoli after a 14-year closure and will also revive the
Tripoli re-finery.

Syria will supply 20,000 barrels of Syrian light crude a day to theripoli
refinery, representing 30 per cent of Lebanon's energy needs.

The deal constitutes a small reassertion of central government authority in
Lebanon. Official oil imports stopped after the government split into two
factions in September 1988.

Lebanon's Tripoli and Zahrani oil refineries were shut down and the domestic
fuel market was left to a handful of private entrepreneurs who built their own
storage tanks and exploited shortages and fluctuations in exchange rates to reap
large profits.

The oil will come from Syrian oilfields near the Iraqi border. 'We are buying
from Syria because the oil is good quality, because it will lower our transport
costs and because we have good relations with Syria,' said Mr Souren
Khanamirian, Lebanon's petroleum and industry minister.

Mr Khanamirian said that Lebanon's central bank had issued a letter of credit
for Dollars 11.8m to cover the first shipment of 50,000 tonnes of Syrian light

The letter of credit had to be increased by Dollars 6m when oil prices rose
after Iraq's invasion of Kuwait. Final price will be determined when deliveries
start later this month.


                   Copyright 1990 The Financial Times Limited

                             2577 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           October 11, 1990, Thursday

Austrian oil group plans expansion into Hungary


SECTION: SECTION I; International Companies & Finance; Pg. 33

LENGTH: 362 words

OEMV, Austria's largest oil and chemical group, intends to expand its business
in neighbouring Hungary and in the Yugoslav republic of Slovenia by opening
retail outlets for its petroleum products.

At the same time, the group announced half-yearly results which showed a balance
sheet total of Sch62.4bn (Dollars 5.8bn), an increase of Sch16bn over the same
period last year.

This was largely due to OeMV's acquisitions of the Austrian-based Chemie group,
as well as the purchase of crude oil and natural gas fields in the North Sea and

The decision to enter eastern Europe, which is expected to take place this year,
is part of OeMV's diversification and expansion in spite of the Gulf crisis and
the increase in petrol prices for the Austrian consumer.

The Gulf crisis has already pushed up petrol prices from Sch9.30 a litre in
early August to Sch10.40 by the end of September.

But so far, OeMV appears to be in a strong, if not enviable, position in terms
of its weak dependence on oil from the Middle East.

OeMV, whose share in the total production of crude oil in Austria is 84 per
cent, has tended to concentrate on diversifying its imports.

In 1989, it imported less than 96,000 tons of crude oil from Kuwait and none
from Iraq or Saudi Arabia. This year, it had imported only 1,000 tons from Iraq.

Instead, the bulk of its oil imports were bought from Algeria (1.3m tons), the
Soviet Union (487m tons), Libya, where it has a 100 per cent share in an oil
field, (889,000 tons) and Iran (673,000m tons).

Total imports for 1989 amounted to 5.9m tons while total domestic production for
the same period amounted to 950,320 tons. Domestic consumption of petroleum
products totals 8.9m tons.

Imports are likely to decrease following OeMV's purchase this year of two fields
in the British North Sea.

With its oil fields in Canada, the share of OeMV's own oil production has risen
from 20 per cent to 30 per cent to 351,000 tons.

Over the first six months of this year, crude oil production amounted to
501,000, a rise of 5 per cent over the same period last year.

The goal is to increase production by 50 per cent over the next few years.


                   Copyright 1990 The Financial Times Limited

                             2578 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           October 11, 1990, Thursday

Mediterranean nations discuss co-operation


SECTION: SECTION I; European News; Pg. 3

LENGTH: 192 words

EUROPEAN and Arab ministers from nine west Mediterranean countries yesterday
launched a new exercise in regional co-operation, neatly side-stepping their
differences on the Gulf crisis and the Arab-Israel conflict.

After a meeting in Rome, Algeria, Morocco, Tunisia, Libya and Mauretania joined
Italy, France, Spain and Portugal in affirming that their new co-operative
arrangements would strengthen, but not substitute for, future European Community
relations with the Maghreb and the Euro-Arab dialogue.

Their political discussions obviously centred on the Gulf crisis and the recent
Arab deaths in Jerusalem. Both were able to condemn the latter and the Arab side
appeared encouraged by what they see as France's recent acceptance of some
linkage between the Gulf and the Arab-Israel problem. The nine plus Malta, which
attended as an observer, also expressed strong support for the Italo-Spanish
proposal for a Conference on Security and Co-operation in the Mediterranean.

Mr Gianni De Michelis, the Italian foreign minister, said afterwards that the
conditions might be ripe to launch such a conference in the first half of next


                   Copyright 1990 The Financial Times Limited

                             2579 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           October 11, 1990, Thursday

Mediterranean nations affirm co-operation


SECTION: SECTION I; European News; Pg. 3

LENGTH: 473 words

EUROPEAN and Arab Ministers from nine west Mediterranean countries yesterday
launched a new exercise in regional co-operation, neatly side-stepping around
their differences of view on the Gulf crisis and the Arab-Israel conflict.

At the conclusion of a day-long meeting in Rome, five countries from the
southern side of the Mediterranean - Algeria, Morocco, Tunisia, Libya and
Mauretania joined Italy, France, Spain and Portugal in affirming that their new
co-operative arrangements would strengthen, but not be a substitute for, future
European Community relations with the Maghreb and the Euro-Arab dialogue.

Their political discussions obviously centred on the Gulf crisis and the recent
Arab deaths in Jerusalem. Both were able to condemn the latter and the Arab side
appeared encouraged by what they see as France's recent acceptance of some
linkage between the Gulf and the Arab Israel problem.

Paris this week suggested that preparations for an international conference on
the Palestinian problem need not await an Iraqi withdrawal from Kuwait.

The nine plus Malta, which attended as an observer, also issued a strong
statement of support for the Italian-Spanish proposal for a Conference on
Security and Co-operation in the Mediterranean. Mr Gianni De Michelis, the
Italian foreign minister, said afterwards that the conditions might be ripe to
launch such as conference in the first half of next year.

The joint declaration they adopted yesterday provides for a wide-ranging
co-operation from which nothing appears to be excluded.

The new relationship would have 'a global character' said the declaration, whose
elements would be politics, security, economics, cultural human environmental.

The nine will meet at a ministerial level once a year to review developments in
their relations.

Economic priorities which have been identified include co-operation on
production norms and certification systems, industrial relations and
technological transfers as well as transport and food self-sufficiency.

On the social front, immigration looms large together with education and

The project will begin with the creation of a Mediterranean Data Bank whose
contents would have a particular emphasis on industrial and commercial

The sensitive immigration issue will first be approached through a study of
'migratory questions' which will aim at encouraging mutually acceptable
solutions on matters such as living conditions of immigrants in Europe, length
of stay, freedom of movement and employment.

Italy, which will introduce immigration quotas for the first time next year,
will have been comforted by a statement by Mr Sid Ahmed Ghozali, the Algerian
foreign minister, that he was more interested in the conditions of life of
emigrants to Europe than on controls on their entry.


                   Copyright 1990 The Financial Times Limited

                             2580 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          October 10, 1990, Wednesday

Ministers to discuss Mediterranean initiative


SECTION: SECTION I; European News; Pg. 2

LENGTH: 350 words

FIVE North African foreign ministers will meet four of their European
counterparts in Rome today to discuss launching a new exercise in regional

The meeting owes much to Italian conviction that fresh approaches are needed,
both to deepen dialogue and co-operation between the northern and southern
flanks of the Mediterranean and to encourage Mediterranean and North African
countries to mount a more determined attack on political and economic problems.

Italy and Spain, who will be accompanied on the European side by France and
Portugal, are hoping the encounter will move forward their proposal for a
permanent Conference on Security and Co-operation in the Mediterranean. Modelled
on its European equivalent, this would aim to provide a framework for resolving
conflict in the Middle East.

Several countries on the North African side at today's meeting - comprising
Algeria, Tunisia, Libya, Morocco and Mauritania - have already expressed
interest in this proposal.

Italy and Spain hope it will be developed in coming months by a working group at
which the eastern Mediterranean will also be represented. But the main purpose
of the encounter in Rome is to put the finishing touches to a 'declaration of
intent', setting out principles for collaboration on political, economic,
environmental and cultural issues. This was discussed at two preparatory
meetings between officials in March and June.

As with the 'Pentagonal' regional grouping which has been set up with Austria
and three east European countries, the Italians insist that this Mediterranean
initiative will not cut across existing European Community co-operation
arrangements.The Italians point out that the North African countries involved
already have bilateral contacts with one or more of the European participants.

It seems that none of the Europeans at the talks have any reservations about
Libyan involvement.

They want, among other things, to argue for a resolution of the Gulf crisis in
line with UN resolutions and believe Libya may be able to exercise a
constructive influence on Iraq.


                   Copyright 1990 The Financial Times Limited

                             2581 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          October 10, 1990, Wednesday

Ministers to discuss Mediterranean initiative


SECTION: SECTION I; European News; Pg. 2

LENGTH: 350 words

FIVE North African foreign ministers will meet four of their European
counterparts in Rome today to discuss launching a new exercise in regional

The meeting owes much to Italian conviction that fresh approaches are needed,
both to deepen dialogue and co-operation between the northern and southern
flanks of the Mediterranean and to encourage Mediterranean and North African
countries to mount a more determined attack on political and economic problems.

Italy and Spain, who will be accompanied on the European side by France and
Portugal, are hoping the encounter will move forward their proposal for a
permanent Conference on Security and Co-operation in the Mediterranean. Modelled
on its European equivalent, this would aim to provide a framework for resolving
conflict in the Middle East.

Several countries on the North African side at today's meeting - comprising
Algeria, Tunisia, Libya, Morocco and Mauritania - have already expressed
interest in this proposal.

Italy and Spain hope it will be developed in coming months by a working group at
which the eastern Mediterranean will also be represented. But the main purpose
of the encounter in Rome is to put the finishing touches to a 'declaration of
intent', setting out principles for collaboration on political, economic,
environmental and cultural issues. This was discussed at two preparatory
meetings between officials in March and June.

As with the 'Pentagonal' regional grouping which has been set up with Austria
and three east European countries, the Italians insist that this Mediterranean
initiative will not cut across existing European Community co-operation
arrangements.The Italians point out that the North African countries involved
already have bilateral contacts with one or more of the European participants.

It seems that none of the Europeans at the talks have any reservations about
Libyan involvement.

They want, among other things, to argue for a resolution of the Gulf crisis in
line with UN resolutions and believe Libya may be able to exercise a
constructive influence on Iraq.


                   Copyright 1990 The Financial Times Limited

                             2582 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            October 9, 1990, Tuesday

Shell 'not holding large oil stocks'


SECTION: SECTION I; Commodities & Agriculture; Pg. 34

LENGTH: 385 words

SIR PETER Holmes, chairman of Shell Transport and Trading, said yesterday that
large oil companies were unable to do much to help moderate soaring oil prices
and that Shell had little oil in its own stocks that could be released to the

'Certainly my company has worked on a minimum level of stocks,' he said, at a
London oil conference sponsored by the Centre for Global Energy Studies, the
energy consultancy chaired by Sheik Ahmed Zaki Yamani.

Sir Peter's remarks appeared to be an answer to critics of the major oil
companies who have said that oil companies should help to bring down prices by
releasing oil from stocks.

He said, nevertheless, that global oil stocks were adequate and that government
releases of strategic stocks were unnecessary.

The Shell chairman estimated that commercial oil stocks outside the socialist
countries amounted to 71 days of forward consumption while government-held
stocks were enough for 24 days. He said a stock level for operating purposes was
63 days, giving the world eight days of surplus supplies.

He said that if oil prices were Dollars 30 a barrel in the fourth quarter,
demand would be reduced by 500,000 barrels a day, and that this would increase
to 900,000 b/d in the first quarter of 1990 should prices remain at that level.

He said that an equilibrium price for oil when the world had 4m barrels a day of
spare capacity was in the mid to high teens for dollars per barrel. With excess
capacity gone from the system, he said, the equilibrium price would be Dollars
25 a barrel, plus or minus 10 per cent.

However he said that Dollars 25 itself would not hold because prices at these
levels would bring on new production and would affect demand for oil.

'Anything above Dollars 25 is a war premium,' he said. 'I think prices are too
high. I think they will decline.'

Sir Peter was not optimistic that governments in consuming countries could do
much to ease the situation.

'Our hope is that governments will not act in a short-term interfering way. A
gaggle of bureaucrats, I suspect, will create just as much of a problem in the

Libya yesterday appointed Mr Abdullah Al-Badri, former chairman of the national
oil corporation, as oil minister, replacing Mr Fawzi Shakshouki. Mr Shakshouki
served throughout the 1980s.


                   Copyright 1990 The Financial Times Limited

                             2583 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           October 3, 1990, Wednesday

Crisis in the Gulf;
Divided Arabs call off meeting with EC



LENGTH: 658 words

ITALY has been forced to postpone a meeting between European Community foreign
ministers and their Arab league counterparts next week because of the bitter
divisions in Arab ranks.

Mr Gianni de Michelis, the Italian foreign minister had, in Italy's capacity as
EC council president, invited all Arab League members, bar Iraq, but it became
clear that Baghdad sympathisers such as Libya and Yemen would not attend.

Mr De Michelis yesterday bowed to the inevitable and announced the postponement
of the Venice meeting. He had been told by several of the Arab foreign ministers
he saw in New York, including Prince Saud of Saudi Arabia, that though they
supported the initiative, they had qualms that a poorly attended meeting in
Venice would only highlight Arab disunity.

At their meeting last month, the EC ministers issued a declaration reaffirming
their 'determination to consolidate and reinforce the historic ties of
friendship which bind them to the whole of the Arab world'. The proposed Venice
meeting had been intended to flesh out this declaration with talks over issues
broader than the present crisis.

EC diplomats yesterday sought to put the best face on the postponement.hey said
the purpose of showing Europe's solidarity with the Arab world had already been
served by a strong anti-Iraq statement agreed by ministers of the EC and of the
Gulf Co-ordination Council (GCC) meeting in New York.

The Arab League has virtually stopped functioning as a forum for all the Arabs
since an emergency summit on August 10 approved, narrowly, the dispatch of a
deterrent force to Saudi Arabia to confront Iraq.

Arab states are still squabbling over the re-location of the Arab League
headquarters to Cairo. The pro-western majority among the 20 Arab states and
Palestine has agreed to move the General Secretariat back to the Egyptian
capital by 31 October. However, an Iraq-led minority is baulking at such a move.
News that the Venice meeting was being called off coincided with faint signs of
optimism in Arab capitals that a diplomatic solution to the Gulf crisis may be
in the wind.

But western officials and Arab experts warn that a slightly more conciliatory
tone from Baghdad at the weekend may simply be a tactical manoeuvre to 'buy
time' and to drive a wedge between France and the US.

On Sunday, President Saddam Hussein referred positively to a four-point peace
plan advanced by President Mitterrand who linked a settlement of all outstanding
Middle East issues with an Iraqi withdrawal from Kuwait. President Bush appeared
to nudge towards the Mitterrand position when he said, in a UN address on
Monday, that 'in the aftermath of Iraq's unconditional departure from Kuwait, I
truly believe that there may be opportunities...for all states and peoples of
the region to settle the conflict that divides the Arabs and Israel'.

The President's guarded talk of a comprehensive settlement indicated that the US
may be redoubling its efforts to find a compromise. An Egyptian Middle East
expert said that it seemed that Washington was getting the message that any
conflict would involve enormous risks for all concerned, not least for the
Americans themselves.

Meanwhile, EC foreign ministers have finally agreed to give Ecu1.5bn (Pounds
1.04bn) in aid to Jordan, Egypt and Turkey. The move follows weeks of indecision
over where the funds should come from. The ministers agreed that the three
states should get Ecu500m in grants and loans from the EC budget with the
remainder coming from national exchequers.

The European Commission had earlier proposed that half - Ecu750m - come from the
EC budget to lessen the argument over national contributions. This argument is
now likely to be all the fiercer, because the sum to be found is slightly larger
and because the UK, France and Germany say they should pay less due to the fact
that they have contributed, in kind or in cash, to the military effort in the


GRAPHIC: Picture, Gianni de Michelis

                   Copyright 1990 The Financial Times Limited

                             2584 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 28, 1990, Friday

Trying again with Iran

SECTION: SECTION I; Editorial; Pg. 20

LENGTH: 545 words

THE RESUMPTION of diplomatic relations between Britain and Iran deserves a
cautious welcome. It does not mean, and should not be taken to mean, that all
problems between the two countries are resolved, still less that the two
governments see eye to eye on all subjects. It means that they see a common
interest in discussing their differences through direct and regular channels of
communication, which is what diplomacy is for.

Technically it was Iran which broke relations with Britain last year when its
parliament voted to sever relations over Britain's refusal to denounce Mr Salman
Rushdie and his novel The Satanic Verses. But in substance that did little more
than formalise a fait accompli created by Britain when it closed its embassy in
Tehran, and expelled the Iranian charge d'affaires in London, demanding a
retraction of Ayatollah Khomeini's death sentence on Mr Rushdie. That decision
was dictated partly by British public opinion, rightly outraged by the sentence,
and partly by fear that British diplomats would be harmed or taken hostage in
the inflamed atmosphere it had created. There may also have been a fear that the
Iranian embassy in London, if it stayed open, could be used as a base by
terrorists seeking to carry out the sentence.

Similar conclusion

In any case, as Sir Geoffrey Howe, then foreign secretary, said at the time,
government concluded that 'in our own particular case it is neither possible nor
sensible to conduct a normal relationship with Iran.' The conclusion was similar
to that reached about Libya, after a British policewoman was killed by a shot
fired from inside the Libyan embassy, and about Syria when Mr Nizar Hindawi was
given shelter in its embassy after attempting to blow up an Israeli airliner.

Normal relationship

Evidently Sir Geoffrey's successor, Mr Douglas Hurd, has satisfied himself that
'a normal relationship' with Iran in this sense is now possible, and that
outstanding problems such as the fate of Mr Roger Cooper, a British businessman
now imprisoned in Tehran, and of British hostages held by groups in Lebanon over
whom Iran is believed to have influence, have a better chance of being settled
after relations are restored than before. Iran has not formally rescinded the
sentence against Mr Rushdie, but it is doubtful whether any one in Iran has the
authority to do so now that the 'Imam' himself is dead. The Iranians have said
they will respect international law. That will not be much consolation to Mr
Rushdie, who remains in hiding from the wrath of any self-appointed Moslem
executioner. But it seems unlikely that the government could do any better for
him by holding out. At least it has not complied with Iranian demands that his
work be censored.

In other respects Iran, besides being in itself an important country and
potentially a very valuable trading partner, has become a kind of ally in the
struggle against Iraqi aggression. Its compliance with UN sanctions could be
decisive and needs to be encouraged, as does the generally pragmatic approach of
its president, Mr Ali Akbar Hashemi Rafsanjani. It is not the time to start
selling Iran weapons - that kind of mistake has been made all too often in
recent Middle Eastern history. But it is normal relations.


                   Copyright 1990 The Financial Times Limited

                             2585 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 28, 1990, Friday

Arab debts take toll

SECTION: SECTION I; Observer; Pg. 20

LENGTH: 215 words

The Institut du Monde Arabe, housed in one of the most spectacularly beautiful
of the architectural monuments erected in Paris under Mitterrand's presidency,
is the latest victim of the crisis in the Gulf.

The institute is publicly funded, 60 per cent by the French government, the rest
by governments in the Arab world; but it has run into a financial crisis, and
yesterday 50 people - a quarter of the staff - were given notice.

The most immediate problem is that Kuwait, normally a regular contributor of its
share of the FFr100m (Pounds 10.2m) budget, is this year claiming to be unable
to pay up the required FFr6m. In fact, Kuwait's problem is just the last straw
in a long deterioration in the institute's finances, which is suffering from the
failure of Arab governments to pay their dues.

Morocco and Tunisia have both tended to be up to date with their payments, but a
number of other, much richer countries are way behind:Saudi Arabia, Egypt and
the United Arab Emirates each owe FFr18m, and Libya owes FFr17m. Iraq, despite
its long and close friendship with France, has never paid a sou, and owes

Arrears accumulated by the Arab member governments total FFr140m. With oil
approaching Dollars 40 a barrel, you would think they could do better than that.


                   Copyright 1990 The Financial Times Limited

                             2586 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          September 27, 1990, Thursday

Crisis in the Gulf;
UK petrol distributors hold fire on price rise



LENGTH: 308 words

BRITAIN's main petrol distributors yesterday held pump prices steady and defied
expectations that they would match the increase announced onuesday by Texaco.

The Texaco increase - up 7.3p a gallon for four-star to 241.4p - followed the
sharp increase in spot market crude and petrol prices on Monday. Spot market
prices however were weaker on Tuesday. Yesterday other companies said they were
waiting for a trend to be established before deciding whether to put up prices.

Prices fell again yesterday morning following the release of the weekly American
Petroleum Institute stock report, which showed an unexpected 5.28m barrel
increase in US petrol stocks in primary inventory. US stocks are now higher than
a year ago, while demand is expected to be weak.

Distillate fuel stocks rose by 3.2m barrels, while crude oil inventories fell by
5.75m barrels. Refinery utilisation also fell from 94 per cent of capacity to
92.8 per cent, while crude oil imports dropped from 6.03m b/d to 5.67m b/d.

Economists at the Royal Bank of Scotland said mid-September spot market petrol
prices would justify a forecourt price of 240p a gallon.

They also defended the behaviour of the oil companies and argued that they had
in fact subsidised motorists over the past two months.

'Indeed, if a criticism were to be made of the oil companies it is that their
subsidisation of the motorist over the last two months is counter-productive.
The price mechanism is one of the most effective methods of regulating demand
for a product,' they said.

'As world oil supplies are threatened it is better to choke off demand than to
be faced with a physical supply shortfall which could lead to a rundown of
strategic oil stocks and put the world even more at the mercy of Opec producers
such as Iran and Libya.'

Editorial comment, Page 20; Management, Page 10


GRAPHIC: Picture, Hectic trading on the International Petroleum

                   Copyright 1990 The Financial Times Limited

                             2587 of 2746 DOCUMENTS

                        Financial Times (London,England)

                         September 26, 1990, Wednesday

Sasea takes 20% stakes in three oil companies


SECTION: SECTION I; International Companies & Finance; Pg. 33

LENGTH: 262 words

SASEA HOLDING, the parent company of the investment banking group controlled by
Mr Florio Fiorini, has acquired 20 per cent stakes in three oil companies
belonging to France's Bollore Group in part exchange for its holdings in Rivaud
Group companies.

Bollore, in association with Credit Lyonnais Investissement, is paying FFr1.7bn
(Dollars 322m) for the shares held by Sasea and Comfinance, a company owned by
Mr Giancarlo Parretti, in Socfin (Financiere des Caoutchoucs) and Plantations
des Terres Rouges (PTR). Sasea held 37 per cent of PTR.

In addition, Bollore is buying for FFr400m Sasea's package of Rivaud shares,
including a 5 per cent stake in Financiere de Moncey.

In return Sasea Holding is acquiring 20 per cent shares in the capital of
Bollore Energie (France), Calpam (Holland) and Satram (Switzerland).

Sasea led a consortium which in 1988 acquired holdings averaging 38 per cent in
several companies in the Rivaud Group. This move was intended to facilitate the
ambition of Mr Parretti to secure control of the Pathe cinema chain in France -
an ambition which has been thwarted by the French government.

Mr Gilles Somers, Sasea's secretary-general, said the Geneva-based holding
company had secured a substantial capital gain from the transactions with
Bollore but would not give a figure.

The exchange would re-inforce the group's activities in the energy field. Sasea
has a 35 per cent stake in Tamoil (Suisse) which recently took over Gatoil,
Switzerland's fourth largest oil company. The majority partner in Tamoil is
Libya's Oilinvest.


                   Copyright 1990 The Financial Times Limited

                             2588 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 24, 1990, Monday

Spain in Mediterranean security drive


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 386 words

THE SPANISH Government, with strong Italian support, will today begin a
concerted campaign aimed at forming a permanent agency on security and
co-operation in the Mediterranean.

The agency, which will be modelled on the Conference on Security and
Co-operation in Europe (CSCE), is designed to pre-empt an economic and political
crisis on Europe's southern flank.

Mr Francisco Fernandez Ordonez, the Spanish Foreign Minister, and his Italian
counterpart, Mr Gianni de Michelis, are expected to press the case for the
creation of a Conference on Security and Co-operation in the Mediterranean
(CSCM) during a one-day inter-seasonal meeting of the CSCE in Palma, Majorca.

The idea, born out of southern European fears that rapid population growth and
shrinking economic resources in North Africa may soon bring the northern and
southern shores of the Mediterranean into conflict, would involve the writing of
a Mediterranean Act similar to the Helsinki Final Act which established the CSCE
in 1975.

Like the CSCE, which consists of a number of 'baskets' of contact between East
and West based on security, economic co-operation and human rights, the Spanish
want a CSCM to involve a trade-off between European economic assistance and
political stability on the southern shore of the Mediterranean.

The proposals are still vague, but all the Mediterranean countries, including
Israel and Libya, are expected to send delegates to the Mallorca meeting.
Spanish officials say that while Washington has been briefed on the plans, the
US has been non-committal.

Spurred by the new Gulf conflict, Mr Ordonez has written to European Community
governments urging them to support the idea. 'Our concern must be to avoid a
possible collision course between Islam and the West,' he said in the letter.
'We must be capable of reacting in a reasonable and co-ordinated way, to
influence the course of events before it overwhelms us.'

The letter, which also suggested the CSCM could address conflict in the Middle
East, added that the population of southern Mediterranean countries would double
by 2025 and 'the crisis of Western-like development models is encouraging the
rise of reactionary traditionalism. . . Fundamentalism in the South has its
Northern counterpart in the reappearance of racism and xenophobia.'


                   Copyright 1990 The Financial Times Limited

                             2589 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 21, 1990, Friday

Crisis in the Gulf;
Egyptians count the cost of losing Iraqi jobs



LENGTH: 625 words

Egypt gains on oil sales but loses on remittances, reports Tony Walker

MOHAMMED Hassan Abdul Baky sat in his unfinished house in the oasis town of
Sennouris, and lamented the fate that had befallen him and thousands of his
fellow countrymen who are among the unwitting victims of the Gulf crisis.

For the 58-year-old, grey-haired schoolteacher, his wife Nabila and seven
children, a relatively comfortable life in Kuwait came to a jarring halt on the
morning of August 2, the day of the Iraqi invasion. Dreams of a secure
retirement in his new two-storey house in Sennouris, west of Cairo, were

'I don't even want to think about working,' said Mr Baky, still recovering from
sunstroke after fleeing Kuwait across the desert to Jordan. 'All I'm thinking
about at the moment is going back, but if the worst comes to the worst I'll work
here in one of the schools.'

This is a typical scene in household after household across Egypt, as teachers,
workers and farmers come to terms with the sudden upheaval in their lives. The
country itself counts the cost of lost remittances from those returning who were
among the 1m or so of its citizens employed in Iraq and Kuwait.

For cash-starved Egypt, which has been receiving about Dollars 3.5bn (Pounds
1.9bn) annually from remittances, forecast losses of up to Dollars 2.4bn
represents a serious setback, even allowing for considerable exaggeration at a
time when donor countries such as Japan are deciding how much aid to give to the
needy. Taken together with a sharp drop in earnings from tourism, hit hard by
fears of Middle East violence, and reduced revenues from the Suez canal, the
picture is not very promising.

The news for Egypt is not, however, all bad. As an oil exporter of about 200,000
b/d, it is receiving an unexpected windfall from the surge in prices, estimated
by one western economic attache in Cairo at about Dollars 100m a month. Aid
flows have also resumed:Saudi Arabia has reportedly made a Dollars 100m down
payment, with the promise of more to follow.

The exiled Kuwaiti government is also said to be giving generously to a country
that is leading the Arab opposition to the Iraqi invasion. Several west European
nations are taking a more benevolent view of Egypt's stuttering economic reform
programme and have relaxed restrictions on new credit.

Most important the US administration has proposed that Egypt's crushing Dollars
7.1bn foreign military sales (FMS) debt be forgiven. If Congress agrees, this
would mean a saving of some Dollars 700m a year in repayments.

Egypt's banks are also benefiting from the crisis, as many of the 240,000
workers who have returned home from Iraq and Kuwait have brought their funds
with them.

But while all these details may suggest that Egypt's predicament is not as bad
as at first feared, there is no question that on the streets of Cairo and other
towns, and in small farming hamlets, the Gulf crisis is causing real hardship.
According to a recent study some 30 per cent of income of rural households
depends on remittances.

In Sennouris, in the Faiyoum oasis about an hour's drive from Cairo, returning
farm workers from Iraq were complaining bitterly about their financial
predicament. Many had not been paid by the Iraqis and were not confident they
would ever receive funds owed to them.

Nasr Allah Bayouni, a 30-year-old farmer, came home earlier this month from Iraq
from a job where had been earning more than Dollars 30 a day, to the prospect of
work in the Egyptian countryside for a fraction of his Iraqi wage. 'You can't
live on the money they pay here,' he said.

But Mr Bayouni had absolutely no desire to return. Instead, he was thinking of
going to Libya to look for work. 'Even if they give me a billion dollars a
year,' he declared, 'I wouldn't go back to Iraq.'


                   Copyright 1990 The Financial Times Limited

                             2590 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 21, 1990, Friday

Nato warns EC against trying to run before it can walk


SECTION: SECTION I; European News; Pg. 8

LENGTH: 723 words

NATO yesterday cautioned the European Community that, in the field of security,
it should not try to run before it had learnt to walk.

In the latest bout of what often seems like guerrilla warfare between these two
Brussels-based institutions, Mr Manfred Woerner, Nato secretary general, said
that the EC could not replace his own alliance organisation in maintaining peace
across Europe because it lacked Nato's tie with the US and its military

But both Mr Woerner and Mr William Taft, the American envoy to Nato,
acknowledged at a US-sponsored conference yesterday that the EC's security role
would, and should, progressively increase, and stressed that the Atlantic and
European organisations should not see each other as rivals.

'Where there is overlap, there should be timely co-ordination,' said Mr Woerner.

However, the past few days had shown that the Community's goals of acquiring a
military dimension could only be 'long term,' said the top Nato official. He was
referring to the stunned reaction of some EC states, including neutral Ireland,
to Italy's proposal to the EC Council of Ministers that the EC should assume the
defence policy role of the Western European Union (WEU).

The Gulf crisis came when Nato and the EC were both looking for a new roles -
Nato, because real peace has broken out in the East and the EC because defence
policy would crown the political union that is soon to be negotiated.

However neither organisation has lived up to the hopes of its enthusiasts. Nato
discussions have tended to highlight differences between the US and the
Europeans. Mr Woerner did this again yesterday by saying that 'some allies still
could, and should, do more' by sending ground troops to join the Americans.

Nor has it been an occasion to swing Nato's increasingly under-used command
structure at Supreme Headquarters Allied Powers Europe into action because the
Gulf crisis lies outside its geographic boundaries.he Community's record of
internal agreement has been just as bad, with squabbles over Gulf-related EC aid
casting a shadow over its better performance on the diplomatic front.

So both organisations are looking for remedies. Mr Woerner echoed yesterday the
recent call by his Nato military counterpart, General John Galvin, for Nato to
re-think its inhibitions about acting 'out of area.'

By contrast, EC states have no inhibitions about co-ordinating their foreign
policies far and wide - just about the military aspect of those policies. So the
core of the proposals by Mr Gianni De Michelis, Italy' activist foreign
minister, is that the EC, as part of its forthcoming political union
negotiation, should take over from WEU the job of co-ordinating European
military deployments out of the Nato area.

The 'out of area' issue is trickier for Nato. It is hard to define. As one Nato
envoy noted yesterday, 'if the Hungarians and Romanians were to go to war over
ethnic issues, that would be 'out of area' for Nato, while if Libya were to fire
missiles at Italian islands - which it has done - that comes within the Nato

It might also be very unwise to launch anything in the Third World under a Nato
flag. That would be very divisive and might, in the Gulf, dissuade any Arabs
from co-operating. By contrast, the WEU is too nebulous an organisation to have
any connotations, good or bad, in the rest of the world.

However, it is not clear whether by subsuming the WEU, the EC would
automatically find it easier to agree on military matters than nine of its
members do inside the WEU.

Part of the problem for Italy and some other EC states is that they want to
advance on the 1987 Single European Act which already says that EC states should
dovetail their policies on security. Writing the word 'defence' into a new EC
treaty would indeed be a advance, but one at which several states would probably

However, if the United Nations were to assume more importance than even at
present seems likely, and if the only joint military operations that the
Europeans were to conceive of were under UN auspices, then the path to a
European defence community would be smoother. Yet the more important the UN
becomes, the more Britain and France will come under pressure from fellow EC
states to share, or even cede, their permanent seats on the UN Security Council.


                   Copyright 1990 The Financial Times Limited

                             2591 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 21, 1990, Friday

New world order must also be different


SECTION: SECTION I; Letters; Pg. 21

LENGTH: 347 words

Sir, Your editorial comment ('Steps to a new world order,' September 17) is
timely. This is so both in the sense that the previous situation of superpower
concentration has come to an end and that there is an urgent need for such an

But it needs to be more than new - it needs to be different. It needs to embody
three really new concepts which are not much in evidence in the Gulf crisis.

One relates to the rule or threatened rule of force. Reports of huge new arms
deals may indeed bring relief to defence industries threatened by post-cold war
disarmament (two recent FT headlines referred to a 'peace scare' and said
'threat of war improves UK defence companies' outlook'). But I do not see how a
new arms race in the Middle East will contribute to a new world order that is
either desirable or relevant.

The recourse to massive military build-up has done nothing to resolve the
complex political factors involved in the Gulf situation. It has already made
them more intractable. A new world order will only make sense if it is based on
political means and disarmament.

Disarmament and rejection of military options is also an essential condition if
the United Nations is to become an arbiter and peacekeeper. New arms build-ups
and the regular misuse of Article 51 by 'big powers' (Falklands, Libya, Saudi
Arabia) make a mockery of talks of a strengthened UN.

Finally, one lesson from the Gulf is the need for a much more carefully
considered approach to countering aggression, making sanctions work etc. The
future does not belong to the 'great powers' alone. Much greater weight has to
be given to the views and needs of the Third World and smaller countries. The
suggestion that Germany become a permanent member of the Security Council is
both inappropriate and irrelevant.

Far from encouraging and feeding a new arms build-up, which will in any case not
be confined to the Middle East, the big powers should commit themselves to a
faster pace of disarmament and concerted action to restrict the arms trade.

Gerry Pocock,

41 Lyndhurst Drive, E10


                   Copyright 1990 The Financial Times Limited

                             2592 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          September 20, 1990, Thursday

Crisis in the Gulf;
Making Iraq 'airtight' poses range of problems



LENGTH: 484 words

THE ultimate value of an air embargo against Iraq will be the ability to
identify and isolate countries still seeking to provide assistance to Baghdad.

This is the view of military experts studying the impact of United Nations
Security Council proposals to expand the current land and sea embargo to include
goods reaching Iraq by air. The international community has no previous
experience of operating an air embargo and the experts admit it will be
difficult to make Iraq 'airtight'.

Only a small quantity of essential military and non-military supplies are
believed to be reaching Iraq by air. These are understood to be primarily coming
from Libya and Yemen (though not necessarily originating from these countries).
They are being flown to Iraq, according to western intelligence officials, using
either Jordanian or Syrian air space.

The proposals before the UN contain both exemptions and one clear loophole. The
exemptions would cover humanitarian supplies of medicines and food shipments -
although the latter would be judged case by case. Flights carrying refugees
would also be exempt as would probably those carrying diplomats and officials.

The loophole centres round the inability to employ the ultimate sanction of
shooting down aircraft which refuse to indentify themselves and their cargo. The
1944 Chicago convention on aviation has been amended to ban this in the wake of
the 1983 downing of the Korean airliner by Soviet jets.

Nevertheless, countries seeking to enforce the embargo can employ a number of
measures which will make a blockade 'reasonably effective', according to Mr
Andrew Duncan of the London-based International Institute for Strategic Studies.

The principal aspects of an air embargo would be:

Flight Control. All aircraft bound for Iraq must obtain clearance from the air
traffic control of its neighbours - Iran, Jordan, Syria, Saudi Arabia and
Turkey. Clearance would be given only after the cargo had been verified. In
principle the aircraft would be obliged to land before receiving clearance. Such
procedure would also apply to aircraft flying over other countries and believed
to be en route for Iraq.

Interdiction. Aircraft denied air traffic control clearance would automatically
lose their insurance cover. They would be challenged in the air by a combination
of being 'buzzed' and radio interference. Warning shots could also be fired.
These aggressive challenges would deter all but the most determined of pilots.

It is recognised that Jordan, at least, may keep its airspace open to
Iraqi-bound flights. However, defence experts point out that once an air embargo
is agreed, it will be possible to monitor with reasonable accuracy those
aircraft going in and out of Iraq. This would then enable the international
community to take sanctions against the airline or the aircraft's country of
origin - or both - for sanction busting.


                   Copyright 1990 The Financial Times Limited

                             2593 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          September 20, 1990, Thursday

'New world order' dilemma for US export controls


SECTION: SECTION I; World Trade News; Pg. 7

LENGTH: 666 words

THE FUTURE of US export controls on products with military application is
another uncertainty in the current state of near-friendship with the Soviet
Union and near-war with Iraq.

The Export Administration Act (EAA), the law governing export licensing on
strategically sensitive products, is due for either reauthorisation or redesign
by September 30.

The Senate last week joined the House in passing an updated version of the law,
but events having been moving with such speed that final passage this year is by
no means a certainty.

Both bills contain significant 'new thinking' with an easing of controls to
Communist and former Communist countries.

But Congress, with the background of 'dual-use' exports to Iraq much in mind, is
still far from a consensus on how to adapt the regime to a shifting 'new world
order' in a way which sensibly balances the demands of business and national

Major sticking points must be resolved before Congress adjourns next month. Will
the role of the Pentagon in the licensing process shrink, as business would
like, or expand?

Will the State Department maintain its current far-ranging authority over
munitions controls and multilateral negotiations? Will Congress limit the
discretion of the president on controls of chemical and missile exports? Will
the new EAA be in effect for one year or two?

Both bills reflect attempts by Congress to keep pace with the the flood of
changes in the world. Although the House in June eased controls to the Soviet
Union and Eastern Europe far more than the Administration wants, it also reacted
to the then on-going Soviet-Lithuania dispute.

One amendment denied the Soviet Union access to American high technology unless
it entered into 'serious negotiation' with Lithuania 'without economic

The House debate was focused on complaints by the US business community that the
rigid, unpredictable system of export licensing gives foreign companies a
competitive advantage.

The legislation was designed to resolve the battles which raged throughout the
1980s among the government agencies resonsible for administering controls - the
Commerce, State and Defence Departments. Specific roles were assigned to each,
with Commerce taking the lead.

This was all unsatisfactory to the Bush Administration which complained that the
bill limited the president's ability to respond to national security and foreign
policy concerns. It was, of course, anathema to the Pentagon, which seemed in
danger of losing its significant role in the licensing process.

Last week's Senate bill was a reaction to the Gulf crisis and a series of press
reports about how the Pentagon barely got the Commerce Department to halt a sale
of furnaces which could be used in making nuclear weapons.

The Senate tightened controls on the export of missile technology, raised civil
and criminal penalties for breaking the current trade embargo against Iran, and
placed Syria, Iraq, Iran and Libya into the category of controlled countries,
subject to review by the Pentagon. It also provided for sanctions against those
countries found to have exported sensitive products to Syria, Iraq, Iran and

The Pentagon would seem, for the moment, to have the upper hand in the debate.
Conservatives are thundering their outrage. Mr William Safire, a New York Times
columnist yesterday demanded that 'see-no-evil' Commerce Department officials
'be given early access to the revolving door'.

On Capitol Hill, a House 'staffer' said Pentagon officials had two months ago
informed his committee that the furnaces posed no danger for nuclear weapons
production. Mr Williard Workman, a US Chamber of Commerce official suggested it
was no coincidence that the story came out a day before the Senate was to vote
on the EAA.

A House-Senate Conference Committee must now negotiate a final bill. Whatever
emerges (if anything does this year) may once again be left in the dust of
events before the next Congress is in session.


                   Copyright 1990 The Financial Times Limited

                             2594 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 17, 1990, Monday

Crisis in the Gulf;
Radicals may send ship to challenge blockade



LENGTH: 238 words

ARAB RADICALS met in Jordan yesterday to draw up plans to send a ship with food
and medicines - and women and children - to Iraq from North Africa to challenge
the international blockade. Delegates were also drafting an appeal expected to
demand withdrawal of foreign troops and implementation of UN resolutions on
Kuwait and the Arab-Israeli conflict.

Participants at the three-day meeting, organised by the left-wing Jordanian Arab
National Democratic Alliance, aim to endorse the link made by President Saddam
Hussein between a solution to the Gulf crisis and demands for an Israeli
withdrawal from the occupied territories.

They remain divided, however, on how to respond directly to Iraq's takeover of
Kuwait. In a letter read to the meeting yesterday, leaders of the Palestinian
revolt in the West Bank and Gaza urged Baghdad's allies Algeria and Libya to cut
off oil to the west and send troops to help Iraq.

Leftists and Arab nationalists grappled with the problem of how to collaborate
over the Gulf crisis with Islamic fundamentalists. The Amman meeting includes
more than 20 radical groups from eight countries, and some Islamic

King Hussein of Jordan, who had accepted an invitation to open the conference,
did not appear. Representatives of left-wing Egyptian parties and a number of
Syrian activists were reportedly barred from travelling to Amman by their
respective governments.


                   Copyright 1990 The Financial Times Limited

                             2595 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 17, 1990, Monday

Monday Interview;
Champion caught up in a crisis



LENGTH: 1409 words

Abdulla Saudi, president of Arab Banking Corporation, talks to David Lascelles

All bankers abhor a crisis, but few actually have to live through one. Someone
who has is Mr Abdulla Saudi, the president and chief executive of Arab Banking
Corporation, one of the leading banks in the Arab world.

Ever since Iraq invaded Kuwait, Mr Saudi has been dashing around three
continents, fighting fires and doing his best to limit the damage of what is now
clearly the worst blow ever to hit the Middle East banking market. He appears to
be succeeding. ABC is still in business, and Mr Saudi himself was able to pause
last week to take stock. 'I hope things come to an end soon,' he said, though
his tone suggested that he doubted they would.

He was speaking in his bank's London branch close to the Bank of England where
the top floor has been fitted out to resemble the courtyard of an emir's palace,
complete with tinkling fountain. It conveyed an atmosphere of tranquility that
was totally at odds with the realities.

Like all Gulf banks, ABC suffered a terrible financial shock with the invasion.
Within hours, virtually all the big international banks had cut off their credit
lines. In the days that followed there was a steady outflow of deposits. To make
things worse, the US Government threatened to freeze the bank because the Kuwait
Government owns 25 per cent of the shares. So Mr Saudi had to rush off to
Washington to try and stop them.

It was not an unfamiliar situation. ABC had already been frozen once - during
the Libya crisis in 1986 - because the Libyan central bank is another big
shareholder. This time Mr Saudi managed to persuade the US that a freeze would
do more harm than good, but it was a further indication of the special risks of
being a bank in a turbulent part of the world.

By the end of August, the ABC parent bank had lost Dollars 1.4bn, or more than
10 per cent of its deposits, though it managed to cope with that because it has
always run a very liquid balance sheet. Its big shareholders and the Gulf
monetary authorities also supported it by placing large deposits.

Unlike some other Gulf banks, ABC has not had to sell any loans to raise cash,
and Mr Saudi is keen not to because he thinks it would send the wrong signal to
the market. Gradually, foreign banks are beginning to restore their credit

But as well as financial injury, Mr Saudi feels that his bank suffered a great
injustice as well. ABC is not Kuwaiti or even Iraqi. It is based in Bahrain, and
the vast majority of its assets are located a great distance from the Gulf
crisis zone. So it should have been out of the firing line. But when confidence
goes in banking, it goes in a rush. ABC was big, Arab and in the Gulf, and that
was more than enough to make it a target.

The speed with which his fellow bankers cut and ran has left Mr Saudi disturbed,
even philosophical, about the way humans behave in a crisis. 'We expected a
strong reaction against Arab institutions, and I don't blame them. But bankers -
and I am a banker so I can say this - always overlook the fundamentals and
traditions. They don't look at the balance sheet. We allow ourselves to be
guided by environmental changes that have nothing to do with the real problems.'

Had bankers really looked at ABC, he says, they would have seen that it operates
in 23 countries and that only 17 per cent of its assets were in Gulf states, and
they were more than covered by deposits. Among other things, ABC owns Banco
Atlantico, the ninth-largest bank in Spain, an ABC subsidiary in Germany, and a
substantial business in London.

He is particularly critical of the Japanese banks which were the quickest to
slam down the shutters. 'You have to say that the Japanese were unfair to us,'
he says. 'Maybe we should react more strongly against them. The value of their
reserves has gone down a lot with the fall in the Tokyo stock market. If we were
all to react like this, what would happen to international banking?' ABC has
begun to mend its fences with the Japanese banks, and the first of them restored
its credit lines at the end of last week. The immediate lessons Mr Saudi has
drawn from the crisis are the wisdom of geographical diversification, the value
of duplicate computer systems, and the importance of personal contacts.

The first was the result of ABC's international ambitions: it has plenty to fall
back on. The second was a precaution taken during the Iran-Iraq war when a
well-aimed bomb on Bahrain could have wiped the bank out. Now, Mr Saudi can call
up the bank's entire management information system in London as well. The third
meant he could telephone through to all his bank's vital clients and depositors
to try to keep them loyal. 'They have to make their own judgments, but at least
I could put the numbers in front of them,' he said.

The strength of Mr Saudi's feelings about the irrationality of bankers will not
come as a surprise to his colleagues. He is well-known as a champion of the Arab
banking cause, and he holds strong views about the need for the Arab world to
develop its own financial institutions to challenge the western-dominated
international banking 'club.' He helped found ABC exactly 10 years ago to lead
that challenge, and now that ambition risks being thwarted.

A Libyan by birth, Mr Saudi spent most of his early career as a central banker.
But in the 1970s he grew increasingly concerned at the way the fast-growing oil
wealth of the Arab world was being funnelled into non-Arab banks. In 1979, he
persuaded the governments of Libya, Kuwait and Abu Dhabi to invest Dollars 750m
in his new bank, which he then built up into the Dollars 22bn institution which
it is today.

His reputation is as a shrewd, aggressive banker with unusually wide experience
of international business. One of his major deals while still in Libya in the
1970s was to manage his country's huge investment in Fiat, of which he was a
board member. His drive, personal charm and fluency have given him a certain
charisma, though he is known to display a Libyan's prickliness in the presence
of non-Arabs; and some of his business judgments, like lending heavily to Latin
America, have been questionable.

His ambition for ABC was always to start selling shares to private investors
once it had become fully established. Ironically, that plan reached fruition
only just before the Gulf crisis. In June, ABC sold its first tranche of new
stock to the international market and picked up 3,600 shareholders. Mr Saudi was
hoping to make another public offering so as to bring the government stake down
to 50 per cent. But that will now have to be shelved, which is a great

'The Arab world must have some sort of presence in the international banking
community,' says Mr Saudi. Quite how large that presence can be, particularly
after recent events, is hard to judge, though Mr Saudi thinks there are still
five Arab banks, including his own, which can realistically aspire to
international status.

He believes they should be able to flourish by financing trade between the Gulf
and the rest of the world. But their best prospects may lie in the rise in the
oil price which has already been triggered by the crisis. Mr Saudi expects to
see the oil price settle at about Dollars 22-Dollars 25, down from its current
peak but well up on pre-invasion levels. This will boost revenues, 'and we'll
have a good share of that,' he predicts.

But he expects the effects of the crisis, if not the crisis itself, to last a
long time. 'I don't want to be a pessimist but I can't be an optimist either.
This is not like the market crash or the Iran-Iraq war. These are differences
between Arab countries.

'No matter what happens, whether there is an amicable settlement or war, the
damage has already been done to the area, and to recover we need a number of
years, especially for our financial institutions.'

'Arab financial institutions will be paying a very high cost. It took them a
long time to be accepted, and even now they are not fully accepted. The
international banking market is like some kind of club, and we may now find
ourselves out of it, not because of things we have done wrong, but because of
the situation in the Gulf.'


1937 Born in Tripoli, Libya.

1955 Commerce and Accountancy diploma.

1957 Teachers' High Certificate.

1958-72 Central Bank of Libya.

1972-80 Chairman and general manager Libyan Arab Foreign Bank

1980 President and chief executive, Arab Banking Corporation.


GRAPHIC: Picture, 'I hope things come to an end soon'

                   Copyright 1990 The Financial Times Limited

                             2596 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          September 11, 1990, Tuesday

Crisis in the Gulf;
Arab League to move HQ back to Cairo



LENGTH: 241 words

ARAB Foreign Ministers last night voted to move the Arab League headquarters
back to Cairo from Tunis after 11 years. Just 12 representatives of the 21 Arab
League members decided to re-locate the organisation's General Secretariat - in
effect its headquarters - to the Egyptian capital. The other nine members of the
League boycotted the meeting.

The Arab League, formed in 1945, was moved from Cairo to Tunis in 1979 in
protest at Egypt's separate peace with Israel. Its return to Cairo is
symbolically and historically important; but the failure of Iraq and its allies
to endorse the move exposes the deep divisions in the Arab world following
Iraq's August 2 invasion of Kuwait.

Last night's meeting was attended by Egypt, Saudi Arabia, Syria, Morocco,
Kuwait, Bahrain, Qatar, the United Arab Emirates, Djibouti, Somalia, Oman and
Lebanon. Those absent were Iraq, Jordan, the Palestine Liberation Organisation,
Algeria, Tunisia, Mauritania, Sudan, Yemen and Libya. Baghdad bitterly opposed
the move. Representatives said the meeting did not try to elect a successor for
Mr Chedli Klibi, the League's outgoing secretary-general, who resigned last
week, because it lacked the required two-thirds quorum of 14 members. Dr Esmat
Abdel Meguid, Egypt's Foreign Minister who has been in hospital since a car
accident at the weekend, sent a message, saying the League's return to Cairo had
'brought matters back to their correct path'.


                   Copyright 1990 The Financial Times Limited

                             2597 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          September 8, 1990, Saturday

America keeps all the options open



LENGTH: 1899 words

Lionel Barber assesses US strategy in the Gulf on the eve of the Helsinki summit

President Mikhail Gorbachev will want some straight answers when he meets
President George Bush in Helsinki tomorrow.

After watching the biggest US military build-up since the Vietnam War take place
less than 700 miles from his southern border, the Soviet leader no doubt feels
entitled to a full explanation of Washington's intentions in the Arabian

However oblique Mr Bush may choose to be, the overwhelming evidence suggests
that Operation Desert Shield is still defensive in nature; the full military
capability to launch effective offensive action against Iraq or Iraqi-occupied
Kuwait remains, in the view of defence experts and informed officials in
Washington, at least two months away.

This is a sobering thought, especially for those feverish spirits willing to
stake money this week that the 'snap' summit in Helsinki is the prelude to High
Noon in Baghdad. According to their script, Mr Bush sought a meeting with Mr
Gorbachev to deliver the message that US forces would move on to the offensive
in the first week of October - a month before the mid-term elections, just as
night temperatures in the Saudi desert begin to dip.

War might still break out sooner rather than later, but unless all the evidence
from the Bush Administration over the past week is an elaborate smokescreen, it
will be more by accident than design. Mr Richard Cheney, US Defence Secretary,
admitted as much on Thursday, when he revealed that total US forces in the
region amount to only 100,000 - implying that those on the ground in Saudi
Arabia itself are considerably smaller. The build-up must continue, he said,
because 'the worst sin of all would be for us to deploy forces out there
sufficient to get into trouble, but not strong enough to deal with any
eventuality that may arise.'

In Desert Shield's initial phase, offensive talk was the best form of defence.
Self-styled experts and brass hats appeared regularly on television to raise the
threat of a 'surgical strike' against Iraq; US air superiority assumed magical
properties; and there was even speculation about a commando assault to liberate

Now that US ground forces are more secure, a more pragmatic tone has taken hold.
General Norman Schwarzkopf, US commander in Saudi Arabia, held his first
briefing for reporters and predicted there would be 'no war unless Iraq
attacks.' Prince Sultan bin Abdul Aziz, the Saudi Defence Minister, declared
that his country would not be 'a theatre for offensive operations.' Finally, Mr
James Baker, US Secretary of State, told Congress this week to prepare for the
long haul:'I think that over time, diplomacy can be made to work.'

Even more intriguing, Mr Baker floated the idea of a new regional security
system to contain Iraq, leaving open the possibility that President Saddam
Hussein and his military machine might survive the present stand-off. This might
not please influential Republican Senators such as Mr Richard Lugar, who argue
that Mr Bush will have 'lost' if Iraq's military machine remains intact, but Mr
Baker's response reveals a sober-minded view of what can be achieved.

'This is not the last crisis of this nature that we are likely to face in this
region,' he told the Senate Foreign Relations Committee.

Mr Baker's trial balloon served to reassert civilian authority after the
ascendancy of the military in August. The result is a broader debate, as people
begin to distinguish between difficult short-term US goals (the withdrawal of
Iraqi forces from Kuwait; the restoration of the legitimate government; the
protection of American lives) and the far more complex long-term objective of
dealing with Iraq as a regional superpower capable of possessing nuclear weapons
in three to five years.

The one-day summit in Helsinki underlines the strength of the Administration's
present commitment to collective action. Mr Bush seems unlikely to push Mr
Gorbachev beyond his political limits. If the US President could have his way,
the Soviets would pull out their 193 military advisers and some 1,000 other
nationals involved in training, maintenance and other military-related work in
Iraq - the remnants of Moscow's long-standing military ties to the regime in

But Mr Bush knows he is dealing with a superpower so weak as to be facing bread
shortages in its own capital. In practice, he will settle for a joint
declaration which removes any hope Mr Saddam might entertain about playing off
the superpowers as a means of hanging on to his heist in Kuwait. The next
logical step is to tighten existing UN sanctions, either through an air embargo
or by seeking penalties

against countries such as Libya and Yemen, widely suspected of breaking the
current embargo. (Jordan, because of its sensitive location, may be a special

The collective approach has proved successful because Mr Bush has rallied
international public opinion with two persuasive arguments:that no country can
sit back and watch a brutal, unpredictable dictator gain sway over more than 40
per cent of the world's oil reserves; and that aggression cannot be seen to pay
in the post-cold-war era.

Yet the Administration still appears to have trouble adapting to an age where
the Lone Ranger has to keep his gun holstered. The emphasis on 'burden-sharing'
to cover the US military operation amounts, for example, to an unnerving
reversal of the Nixon Doctrine which, in effect, said:'Your boys will fight, but
we'll pay.' Now, it appears, a cash-strapped Mr Bush is saying:'Our boys may
have to fight, and in any case you'll have to pay.'

Working estimates within the Administration put the burden-sharing cost at about
Dollars 23bn (roughly half of which would go to Desert Shield, with the
remainder funnelled to countries hurt by the UN embargo and the rise in oil
prices). The hardest hit are the 'front-line states' such as Egypt, Jordan and
Turkey; but others include the oil-dependent newly emerging democracies in
eastern Europe as well as countries such as Pakistan and the Philippines. Mr Sam
Nunn, Democratic Chairman of the Senate Armed Services Committee, predicts that
if the embargo is maintained, the total sums required over the next 12 months -
if the problems faced by eastern Europe are factored in - could be nearer
Dollars 50bn.

Can the US raise this kind of money? Apart from the wealthy Arab states, notably
Saudi Arabia, rich industrialised countries such as Japan and West Germany are
the obvious targets. Japan faces a severe backlash in the US Congress unless it
comes up with more than the Dollars 1bn pledged to date; and while there may be
sympathy for West Germany's need to pay for reunification, it will fast
evaporate if American soldiers die in the desert as a result of German-supplied
chemicals inside Iraqi weapons.

Sticking to a collective, medium-term strategy with military options on the
back-burner also carries risks. It assumes Mr Bush can maintain the
effectiveness of a UN embargo when historical evidence (Rhodesia) suggests
otherwise. It puts a premium on that largely untested American virtue, patience;
and, most important, it threatens to blur some of Mr Bush's original objectives.

The most obvious is the restoration of the Al-Sabah family. Already, the
grumbling has begun on Capitol Hill about why the US is committed to restoring a
ruling family in Kuwait some of whose members are temperamentally more suited to
the European spa than to the front line.he Emir may rank as one of the more
enlightened sheikhs, but he is no Charles De Gaulle. 'The story Americans are
watching on television has been all about hostages, refugees and the possibility
of starvation in Baghdad,' said one senior congressional official, 'but there
has been very little about the Kuwaiti Government in exile.'

In fairness, some of the activities of the Kuwaiti resistance remain secret, as
part of the US-backed 'covert operation' aimed at destabilising Iraq and
weakening its hold on Kuwait. But unless the picture changes, the talk about
cutting deals with Mr Saddam could easily spread from Arab capitals to

This week, for example, Mr Sol Linowitz, who served as President Jimmy Carter's
special envoy after Camp David, put forward his own peace proposal. Among its
components:Iraqi withdrawal from Kuwait and the release of all hostages; US
withdrawal from the Gulf, leaving a token multinational military presence; and
free elections inside Kuwait (but not for some reason Iraq).

Peace talk is one reason why Mr Baker - Mr Invisible for much of the past four
weeks - surfaced in Congress to present his (admittedly sketchy) vision of a new
regional security system made up of Arab states backed by the US. By raising the
prospect of a long-term US military presence, Mr Baker finessed what Pentagon
officials admit is their private nightmare:an Iraqi withdrawal from Kuwait which
leaves Baghdad's military machine intact and raises Arab pressure for a US

Much about this putative Meto (Middle East Treaty Organisation) remains to be
fleshed out. How would the envisaged multinational Arab alliance react to
Washington's ties to Israel? How feasible is it to put the likes of Syria in bed
with the Gulf emirates? What role is to be assumed by Iran, a natural strategic
counterweight to Iraq? Why should a regional Gulf body be more successful than
the ill-fated Baghdad Pact of the 1950s? Would an overt US military presence not
have a destabilising effect throughout the Arab world?

The answer is that nobody knows, though Mr Baker's testimony left few in doubt
that a significant long-term US military presence will be part of any future
Gulf equation. 'There's no way we'll be out in a year's time,' said Senator
Daniel Patrick Moynihan, the New York Democrat, 'Listen, we've been in Korea
since 1950. We've been on the Rhine for almost half a century. That's the stuff
of Roman legions.'

The difference, of course, is that the US was, in most instances, prepared to
extend nuclear guarantees to its allies, most of which were democratic
governments. Would the same guarantee apply to its new, undemocratic friends in
the Gulf; or would the US - backed by the Soviet Union - launch an ambitious
programme of regional disarmament backed by enforceable nuclear
non-proliferation pacts. If so, how would a nuclear-capable Israel respond?

These are just some of the issues which Mr Bush is expected to touch upon
tomorrow. Yet he must also be keen to leave the Soviet leader in no doubt that
the US will, if necessary, use force to achieve its objectives.

The circumstances which might trigger the military option remain unclear, though
the obvious potential flash-points would be the killing of American hostages, a
flare-up caused by the enforcement of sanctions, or Mr Saddam himself lashing
out against US forces or Israel as the embargo tightens. What is clear is that
Mr Bush, who has no desire to see thousands of American casualties, will have to
wait before he is in a position to launch an assault for which at present there
is no international or congressional mandate.

In two months, when the boys (and girls) fail to come home for Christmas and the
UN sanctions have had a chance to work, the picture might look different. But
having opted for collective action, Mr Bush knows he needs a very good pretext
before he launches offensive action to remove Iraq from Kuwait.


GRAPHIC: Picture, no caption; Picture, no caption; Picture, Getting ready for
High Noon in Baghdad? President Bush, topleft, Saddam Hussein and King Hussein
of Jordan, Gazelle helicopter

                   Copyright 1990 The Financial Times Limited

                             2598 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 4, 1990, Tuesday

Libya, Chad seek ruling

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 25 words

Diplomats say Libya and Chad are asking the International court of Justice in
The Hague to settle their dispute over territory in northern Chad.


                   Copyright 1990 The Financial Times Limited

                             2599 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           September 4, 1990, Tuesday

Crisis in the Gulf;
Doubts raised over air blockade



LENGTH: 821 words

NOT since the blockade of Berlin in 1948 by the Soviet Union has the notion of
an old-fashioned siege come so sharply into focus. The campaign to isolate Iraq
gathers momentum by the day, but one glaring loophole remains and it is
difficult to see how it might be blocked short of all-out war in the air.

Comments at the weekend by Mr Douglas Hurd, Britain's Foreign Secretary, to the
effect that an air blockade might be required to seal Iraq more completely from
the outside world indicated concern in the west about the Iraqi ability to
circumvent a trade embargo by using its substantial fleet of military and
commercial cargo aircraft.

Mr Hurd told reporters travelling with him in the Gulf that consideration was
being given to imposing an air blockade, but he said that any action of this
nature would require United Nations imprimatur. Interference with air traffic is
a dangerous game, and one that the Security Council would embrace with

Overflight rights

The Foreign Secretary hinted at the first line of attack when he said that the
west was 'looking at the countries over whose territory such (sanctions-busting)
aircraft would have to fly'. The implication here was clear:pressure would be
applied to states in the region to deny overflight rights to aircraft bound for

This week Cyprus, which had almost certainly been leaned on, quietly let it be
known that Libyan aircraft would not be permitted to use Cypriot airspace on
their way to Iraq. Libya is one among three or four of Iraq's Arab friends
co-operating in attempts to circumvent the tough UN-mandated trade embargo.

Libya was reported last week to have sent six flights to Iraq carrying food,
arms and chemicals. Libyan leader Colonel Muammer Gaddafi said at the weekend
his country would not enforce a ban on food shipments to Iraq.

'It is not possible for us to participate in an action designed to starve people
and children in Iraq,' he said. Maghreb foreign ministers meeting in Algiers
expressed similar views. Over the weekend India said it planned to send Kuwait
10,000 tons of food and medicines. Mr Don Kerr, an air defence expert at the
International Institute for Strategic Studies in London, said he could not think
of any parallels to steps being proposed by Mr Hurd, except in time of war. It
would be difficult forcibly to stop flights into and out of Iraq.

He said he hoped that the UN would not try to impose such a blockade because it
was almost certainly doomed to failure. There was little that countries seeking
to impose an air blockade could do to stop sanctions-busting aircraft short of
shooting them down, and this clearly would go far beyond any measure that the UN
might be prepared to approve.

Mr Kerr doubted, however, that, given Iraq's huge appetite for imported
foodstuffs, it had the carrying capacity to make much of a dent in requirements.

Admittedly, Iraqi Airways has three Boeing 747-200C convertible passenger/cargo
jets which can carry as much as 250,000lb of cargo. Baghdad might also use some
of the 15 Kuwaiti civil aircraft captured during the invasion. Also available
are the Soviet military transports of the Iraqi air force.

However, the scale of a significant airlift would be beyond their capabilities.
Although Iraqi Airways increased the volume of cargo carried by 50 per cent in
1987, the last year for which figures were filed by the Iraqi authorities, it
only transported 59m tonnes/kilometres. Even the support of the Libyans with
their 10 Hercules C130 and Soviet transport aircraft would make only limited

The most significant use of such aircraft would probably be to transport not
food but spare parts for military equipment.

Spare parts

Iraq's most critical shortages are likely to be for spare parts for its military
jets. Most of these are Soviet Mig-23 and Mig-21 aircraft and French Mirage
fighters and ground attack jets. Both countries have said they will not supply
Iraq with parts.

One avenue for the west would be to exert pressure on countries being used as a
trans-shipment point for goods to be airlifted to Iraq.

It would not be too difficult for the US and its partners, with the
sophisticated surveillance systems at their disposal, to track aircraft flying
in and out of Iraq back to the places where they loaded embargoed goods.

However, even if the international community is armed with this knowledge it
would still be difficult to make such an embargo stick. 'It should be the
ultimate impossibility to enforce an air blockade,' said Mr Kerr, 'as long as
any single state is prepared to be one end of an airlift to Iraq. The danger is
that you could end up blockading half of the Middle East.'

'You cannot as yet lasso an aircraft and bring it to a shuddering halt,' he
added. 'You need the co-operation of the crew to arrest an aircraft and clearly
in a sanctions-busting operation that would not be forthcoming.'


                   Copyright 1990 The Financial Times Limited

                             2600 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          September 1, 1990, Saturday

Crisis in the Gulf;
Arab moderates toughen stance against Iraq



LENGTH: 737 words

ARAB foreign ministers meeting in Cairo last night approved a toughly-wordly
resolution demanding Iraq's immediate withdrawal from Kuwait and holding it
responsible for war damages.

The Arab moderates displayed their tougher line as the Baghdad regime tried to
link the Gulf crisis with other Mid-East issues in crucial talks in Amman
between Mr Javier Perez de Cuellar, the United Nations secretary-general, and Mr
Tariq Aziz, the Iraqi Foreign Minister.

The Arab talks in Cairo mark the first time that the issue of paying
compensation has been formally raised in the Gulf crisis. This is a further
indication of the stiffening in the position of the Arab world's moderate
majority led by Egypt and Saudi Arabia.

A thin majority of 13 of the 21 Arab League states attended the gathering at a
Cairo hotel on the banks of the Nile. Absent were eight members, including Iraq,
Algeria, Jordan and the Palestine Liberation Organisation.

The meeting's resolution, which is bound to deepen the rift in the Arab world,
signals the Egyptian-led front's growing impatience with its Arab opponents.

The five-point resolution called on Iraq to:

Withdraw its troops immediately and unconditionally from Kuwait.

Pay damages caused by the invasion and also redeem subsequent losses.

Guarantee Kuwaiti assets such as funds in the Central Bank said to have been
transferred to Baghdad.

Immediately release hostages.

Abandon attempts to close embassies in Kuwait.

The foreign ministers, who began their emergency session late onhursday,
reiterated an Arab League summit call for the return of Kuwait's ousted al-Sabah
family to power. They also insisted that the Arab League should bear sole
responsibility for an Arab solution to the conflict.

Officials in Cairo spoke disparagingly of the various Arab peace initiatives now
being undertaken outside the scope of the Arab League by, among others, King
Hussein of Jordan and Mr Yassir Arafat, the PLO chairman.

Mr Chedli Klibi, the secretary general, said that any credible initiative must
have the Arab League's imprimatur. 'Any Arab initiative has to be based on the
charter of the league and the traditions of joint Arab efforts and on the
resolution of the emergency Arab summit,' he said.

The Cairo meeting insisted that a resolution adopted at the emergency Arab
League summit on August 10 be the basis for any pan-Arab attempt to resolve the
Gulf crisis.

That resolution, calling for an Iraqi withdrawal and authorising the despatch of
an Arab deterrent force to Saudi Arabia, was passed by a majority of 12 with two
voting against - Iraq and Libya - and six abstentions. Tunisia did not attend
the summit.

Meanwhile, in his search for a diplomatic way out of the Gulf crisis, Mr Perez
de Cuellar appeared to have made little progress last night after two rounds of
talks with the Iraqi foreign minister in the Jordanian capital of Amman.

Mr Aziz was clearly bent on seeking to attract Arab support away from the
western stance.

He said he told the UN secretary general that any peaceful solution to the Gulf
crisis should be linked to the settlement of other Middle East conflicts, such
as the Israeli-Palestinian dispute. The Iraqi minister, who never mentioned in
remarks to reporters Iraq's invasion of Kuwait, said the situation in the Gulf
was explosive because of 'American and western and Atlantic forces in the
region. It is not the responsibility of Iraq.' He said Iraq had no intention of
initiating military conflict. The issue ought to be resolved within an 'Arab

He complained of double standards in the world's treatment of Iraq compared with
the Palestinian and Lebanese conflicts. 'If the Security Council wants peace,
justice and security in this region, we would like that all these issues be put
on the table and discussed.'

Mrs Margaret Thatcher had talks with King Hussein of Jordan in London yesterday,
but the meeting left them no closer in their analyses of the Gulf crisis, writes
Alison Smith.

The Prime Minister's office said both agreed on the need for Iraq to withdraw
from Kuwait and on the need for United Nations sanctions, but they remained
'quite far apart in their assessment of the causes of the dispute and ways to
resolve it'.

King Hussein said he had not put his 'peace plan' to Mrs Thatcher, though he had
been expected to seek her support for it at the start of his tour of Western


                   Copyright 1990 The Financial Times Limited

                             2601 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 31, 1990, Friday

Sanctions-busting Iraq likely to shrug off trade embargo



LENGTH: 1056 words

Cyprus and the Lebanon are at the heart of the attempt to beat the blockade,

THE ISLAND of Cyprus in the eastern Mediterranean has long been a crossroads for
a good deal of shadowy Middle East business. Together with the Lebanon it is
already at the heart of Iraqi sanctions-busting activities.

In theory the UN-backed trade embargo will cause considerable problems for the
Iraqi economy in terms of both food and manufacturing capability. But embargoes
and blockades have seldom been water-tight and the present attempt appears
unlikely to prove an exception.

There are plenty of Levantine middlemen who cannot believe their luck as they
begin to assess the opportunities for quick profits. Reuters reported this week
from Tripoli, in northern Lebanon, that businessmen in the eastern Mediterranean
have already formed a network to get food and medical supplies into Iraq. Some
of these traders are located in Lebanon's Christian enclave north of Beirut.

Along with associates in Cyprus - Palestinian, Lebanese and Iraqi merchants are
well-established on the island - these Lebanese traders are meeting Iraqi orders
for such items as margarine and rice.

Traders appear to be having little difficulty in moving goods into Iraq by a
number of routes and by using false manifests. In one case food is being taken
from Christian East Beirut to Damascus, and then on to Jordan. In Jordan the
manifest is changed to show Iraq as the final destination.

One of the problems faced by the west in its efforts to isolate Iraq
economically is that it shares porous borders with no fewer than five states -
Turkey, Iran, Syria, Jordan and Saudi Arabia. Illicit traffic across these
ill-defined boundaries has been going on for generations.

'How can you blockade a country which has thousands of miles of borders? It is
virtually impossible,' suggested one Middle East trader.

In addition, it is believed that a small number of cargo flights from Libya -
possibly half a dozen - have arrived in Iraq in the past week.

On the surface things look dire for Iraq. It imports between 80-90 per cent of
its food, including much of its wheat and rice. Iraq faces the problem of
feeding its own 17m people, and another 1.5m in Kuwait. On top of this it has a
rapidly growing population with a 3.5 per cent birthrate - one of the world's
highest. But even if the blockade proves partially effective, the Iraqi economy
may be flexible enough, in the short term, to deal with the blockade by reducing
demand for food and increasing farm production.

Western officials in the Iraqi capital say that with careful management of
resources Iraq will probably be able to hold out until later this year without
serious discomfort.

This year Iraq is expecting a bumper wheat harvest of about 400,000 tonnes
compared with only 100,000 tonnes in 1989. Western officials also say Iraq can
increase agricultural production yet further because of plentiful water

One factor that may limit further growth is a shortage of manpower. Any increase
in agricultural production will need a large workforce to build irrigation works
to cope with widespread soil salination. Iraq already has about 1m men under
arms. Before the crisis it was dependent on foreign labour to maintain much of
the economy and many of those foreign workers are now fleeing the country.

Reports from Iraq indicate that the authorities are responding to the crisis by
controlling demand for food and are digging in for a long siege. Tomorrow Iraqi
President Saddam Hussein is introducing rationing and is urging people to
tighten their belts while resources are directed towards the armed forces.

The equitable allocation of the remaining resources will prove one of Baghdad's
most significant problems in the coming months, according to Dr Avner Offer, a
reader in economic and social history at the University of York and specialist
on the effect of blockades on wartime economies.

Historically, the introduction of rationing and fixed prices has proved a
disincentive for peasants to bring their produce to market, explains Dr Offer.
Wealthy urban citizens have reacted to the resulting shortages by contacting the
farmers directly and tapping into the black market. Meanwhile the urban poor and
those on fixed incomes have usually suffered, exacerbating social tensions.

Allocation of dwindling resources will require careful management, but western
observers say that Iraq's experience in 'managing' its population at time of
hardship during the protracted Gulf war is likely to be invaluable in the weeks
and months ahead.

In the short term, says Dr Offer, the Iraqis appear to have the mechanism and
the ruthlessness to suppress the black market. The Iraqi government has warned
that merchants who hoard or profiteer will be shot. The threat is not idle:in
August 1986, six Iraqi businessmen were executed for corruption.

'They're very shrewd and very tough,' said a western official of the Baathists.
'I wouldn't see sanctions being the ultimate terror weapon that brings them to
their knees.'

Iraq is a highly structured society in which the Baath Socialist Party embodied
by Mr Saddam is a pervasive presence. Every business, institution or
organisation of any size includes at least one party man on its staff.

These people are the eyes and ears of a regime that has ruthlessly crushed
dissent over the years, and has shown little or no sign since the winding down
of the Gulf war in August 1988 of slackening its grip on society.

The US administration's hopes that the UN economic blockade can achieve a timely
Iraqi withdrawal from Kuwait may well be over-optimistic.

One official, who recently completed a three-year tour of duty in Iraq, said the
West should be under no illusions about the difficulties of wearing down both
the leadership and populace.

'Iraqi people are very tough. The leadership is very tough,' he said. 'If they
feel that they are being pressured by hostile outside forces, they will tighten
their belts. I don't think starving them out will achieve quick results.'

IRAQ: Imports as share of total consumption
Product            %
Tea and coffee   100
Vegetable oil     99
Sugar             99
Rice              84
Maize             88
Wheat             76
Meat              65
Source: UN Food & Agriculture Organisation


GRAPHIC: Table, no caption

                   Copyright 1990 The Financial Times Limited

                             2602 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 31, 1990, Friday

Crisis in the Gulf;
Eight Arab nations boycott Cairo meeting



LENGTH: 176 words

A thin majority of Arab foreign ministers began meeting in Cairo last night in
an attempt to exert further diplomatic pressure on Iraq. But the gathering,
called by Egypt, served to further underline deepening divisions in the Arab
world, writes Tony Walker in Cairo.

Only 13 of 21 Arab foreign ministers answered Egypt's call to attend the
emergency session to review developments since the August 10 Cairo summit voted
to send an Arab deterrent force to Saudi Arabia. The effective boycott by eight
Arab states is an embarrassment for Egypt which heads a front ranged against
Iraq. Cairo had hoped there would be broader representation.

Apart from the 12 Arab states that voted for the August 10 resolution, only
Libya is represented at this gathering. Those boycotting include Iraq, the PLO,
Algeria, Sudan, Tunisia, Yemen, Mauritania and Jordan.

At the Cairo summit, convened by President Hosni Mubarak, Iraq and Libya voted
against the resolution. Jordan, the PLO, Mauritania, Algeria, Sudan and Yemen
abstained. Tunisia did not attend.


                   Copyright 1990 The Financial Times Limited

                             2603 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 30, 1990, Thursday

Crisis in the Gulf;
The best of Arab friends fall out



LENGTH: 400 words

WHEN President Hosni Mubarak of Egypt chided King Hussein of Jordan this week
over misrepresenting remarks he had made about the dangers of war in the Middle
East, it was merely the latest of many examples of old Arab friends falling out
in the present Gulf crisis.

It was only a few weeks ago that Egypt's president and Jordan's monarch were the
best of friends, and the closest of allies. They were frequent visitors to each
other's palaces and confidants in numerous telephone conversations.

Now they are sniping at each other in a manner that would have seemed more than
surprising as recently as early this month, before Iraq's August 2 invasion of
Kuwait overturned many regional alliances.

As most Arab foreign ministers prepare to meet in Cairo today to review
developments since an emergency Arab summit on August 10 committed forces to
Saudi Arabia, there are no fewer than four Arab 'initiatives' in progress.

These include:

King Hussein's flying carpet mission to North Africa and Europe in an effort to
persuade anyone who will listen that foreign intervention is disastrous, and
that an Arab solution is the best option to solving the crisis.

Mr Yassir Arafat's five-point proposal. The PLO leader has entered an ambitious
claim for the settlement of all disputes in the region, including that of

Tunisia's mediation effort, being conducted in co-operation with its four
brother Maghreb states - Morocco, Libya, Mauritania and Algeria.

Egyptian-led attempts by the moderate pro-western majority, largely consisting
of the Gulf states, to pressure Iraq into withdrawing from Kuwait.

Jordan's Crown Prince Hassan has, meanwhile, called on the west to pursue Iraq's
offer of negotiations over the Gulf crisis or risk escalating violence in the
region. 'We risk the tragedy of a spiral of violence. . . and for this reason we
should take seriously, and not as propaganda, Iraq's offer of negotiation,' he
told the Spanish daily, El Pais.

The prince noted that Amman had become a 'relay point' for mediation efforts
involving Baghdad. 'We have not sought this but we have become the only window
left for Baghdad to speak to the world,' he said.

Mr Javier Perez de Cuellar, the UN Secretary General, arrives in Amman today for
a meeting with Mr Tariq Aziz, Iraq's Foreign Minister. He has said he is
engaging in a personal mission as a matter of utmost urgency.


                   Copyright 1990 The Financial Times Limited

                             2604 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 30, 1990, Thursday

Crisis in the Gulf;
Opec agrees an immediate increase in production



LENGTH: 614 words

AN IMMEDIATE increase in oil production was agreed yesterday by the Organisation
of Petroleum Exporting Countries, meeting in Vienna, in an effort to restore
stability to world oil markets following the Gulf crisis. The agreement, backed
by 10 of Opec's 13 members, suspends production quotas temporarily until 'the
present crisis is deemed to be over'.

But a communique notes that the oil supply crisis could be prolonged and some
ministers were privately pessimistic that the Gulf crisis could be resolved
peacefully. Oil prices have risen sharply since Iraq invaded Kuwait, though they
fell this week as tension eased.

Oil prices tumbled again yesterday. In the US, the benchmark West Texas
Intermediate for October delivery fell Dollars 1.96 to Dollars 25.92 a barrel.
In London, Brent crude futures for October delivery was down Dollars 1.67 at
Dollars 24.57.

Ministers and delegates at the Vienna meeting were broadly satisfied that Opec
had reacted responsibly to the Gulf crisis. Iraq, which was not at the meeting,
earlier warned that Opec moves to lift output would be seen as aggressive, but
these threats were ignored. Libya was also absent.

There was relief that Saudi Arabia, the United Arab Emirates and Venezuela had
not been forced to raise output on their own in violation of an Opec agreement
signed a month ago.

'I hope consumers will see that Opec is there to assure supplies to the market,'
said Sheikh Ali al-Khalifah al-Sabah, the Kuwaiti Finance Minister, who has been
a key architect of Opec strategy in recent years. 'There will be plenty of oil
on the market.'

Opec production has already started to rise rapidly, according to market
analysts. Venezuela and the UAE are expected to increase production by 500,000
b/d each. Mr Jibril Aminu, the Nigerian minister, said his country was prepared
to lift production by over 250,000 b/d.

Saudi Arabia is understood to be preparing to increase production by over 2m b/d
to a sustainable volume between 7.5m b/d and 8m b/d. Sustained production at
this level would be higher than most outside observers have believed possible.
The Saudis are understood not to have a specific target but are prepared to
respond to requests for additional supplies until capacity is reached.

None the less, said one minister, 'Whatever we do in Opec we will not be able to
compensate for the closure of Iraqi and Kuwaiti facilities.'

Together Opec countries should be able to compensate for over 80 per cent of the
4m b/d of Iraqi and Kuwaiti oil lost to the market.

Opec ministers also called on the International Energy Agency, the Paris-based
organisation responsible for co-ordinating the industrialised countries'
response to an oil shortfall, to execute the IEA oil-sharing agreement and to
release oil stocks held by consumer countries.

Mrs Helga Steeg, IEA executive director, welcomed the Opec decision to increase
production but said the oil supply situation did not yet warrant use of
government stockpiles. She also rejected a proposal by Mr Gholamreza Aghazadeh,
Iranian oil minister, for joint IEA-Opec action as not feasible, politically or

The IEA governing board meets tomorrow to review the market and to decide
whether action is required. Iran remained opposed to the agreement to lift
production on the grounds that this should be done only in co-operation with
consuming countries. But Opec ministers stressed they understood the Iranian
position and did not wish to isolate Iran.

The Vienna communique said Opec members' additional supplies and stock releases
from consumers should be directed toward developing countries which are being
hit hardest by the current crisis.


                   Copyright 1990 The Financial Times Limited

                             2605 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 29, 1990, Wednesday

Crisis in the Gulf;
Opec meeting defies prophecies of doom



LENGTH: 1004 words

Steven Butler sees Saudi Arabia win an agreement for a rapid rise in oil

THE Organisation of Petroleum Exporting Countries was yesterday doing all it
could to make the best out of a bad situation. Amid predictions that it would
see its demise as a result of the Gulf crisis, it was managing to walk, if not
actually race, through a tough obstacle course.

The agreement provisionally endorsed yesterday by 10 of Opec's 13 members was a
political victory for Saudi Arabia, which has lobbied hard for a rapid increase
in production. Some delegates to the meeting said, however, that Saudi tactics
and threats to raise output unilaterally if necessary had caused considerable
friction. Opec has traditionally worked by consensus.

The agreement is aimed explicitly at promoting stability in the oil markets. In
reality it will merely provide formal political sanction for an increase in Opec
production which has already begun. Delegates none the less said that the
agreement would bolster the organisation's credibility as a force for stability.

The last agreement signed on July 27 in Geneva, which set a production ceiling
of 22.5m b/d and a target price of Dollars 21 a barrel, is to be upheld by
suspending production quotas and allowing Opec production to rise toward the
22.5m b/d level.

Saudi Arabia, the United Arab Emirates, and Venezuela are expected to lift
production by about 3m b/d, compared to 4m b/d of lost exports from the Gulf.

The agreement was about to be approved yesterday at midday when the 10 ministers
agreed to turn an informal consultation session into a formal meeting of Opec's
ministerial monitoring committee.

However, Mr Fawzi Shakshuki, the Libyan minister, who has not attended the
talks, telephoned to protest at the convening of a formal meeting to which he
had not been invited. The organisation subsequently telexed invitations to Libya
and to Iraq, also not in attendance, and has given the ministers until this
morning to arrive.

Neither minister is expected to accept the invitation, although if they come to
Vienna the proceedings could become more complex.

Mr Gholamreza Aghazadeh, the Iranian minister, has been the sole member in
attendance to hold out against the agreement. He has argued strongly that Opec
should wait until October before raising output in order to force the
industrialised countries who are members of the Paris-based International Energy
Agency to co-operate in stabilising the market.

'I would like to ask the IEA to release their stocks,' he said. Oil market
stability 'is not the responsibility of Opec only. Everybody is responsible for
this matter.'

The Iranian minister argued that oil supplies were plentiful. The price had been
driven up by political factors and Opec should not be in the business of just
sending signals to the market.

The draft agreement includes a paragraph advising the IEA to release stocks, but
Mr Aghazadeh wanted stronger language and a direct request to the IEA. He also
suggested that the IEA make a formal request to Opec to increase production. He
said that with IEA stocks equal to about 98 days' forward consumption, agency
members could release 4m b/d of crude oil for 90 days and still have a
comfortable stocking level that would be reduced by only 10 days of forward

The IEA governing board will meet in Paris on Friday, although it is not
expected to endorse a release of government-held strategic stocks.

Many of the delegates from other Opec members were impressed by Mr Aghazadeh's
arguments, although there were also accusations that Iran's stubborn refusal to
back the agreement was politically motivated.

They suggested Mr Aghazadeh wanted to avoid handing an even bigger political
victory to Saudi Arabia.

The steep fall in oil prices on Monday convinced many delegates that it was
psychology rather than supply and demand that has driven the price so high. The
Saudis have conceded this, but have argued that Opec must respond now to a
potential shortage of oil in the fourth quarter.

Algeria, traditionally an ally of Iraq, was also reluctant to back the
agreement. But Mr Sadek Boussena, the Algerian minister, is the Opec president
and endorsed the agreement in an apparent attempt to uphold unity. Indonesia and
Nigeria appear to have backed the agreement reluctantly for similar reasons.

Although Opec will emerge from the meeting divided, the fact that 10 members
have endorsed the agreement is a remarkable achievement, given the political
differences among them. The organisation will probably become dormant until an
end to the Gulf crisis makes it politically possible to hold a meeting in which
all 13 members participate.

Until then, Opec's production quota system will have no meaning. Even if all
Opec countries produce at capacity, they will not be able to make up for all of
the lost Iraqi and Kuwaiti production.

But at least the organisation will in the meantime have avoided destruction by
agreeing to mothball itself. Eventually, members are sure to find the oil cartel
useful again.

                  Quotas*        Production
               (August 1990)  (April-June 1990)
 Algeria           0.827             0.8
 Ecuador           0.273             0.3
 Gabon             0.197             0.2
 Indonesia         1.374             1.2
 Iran              3.140             3.1
 Iraq              3.140             3.1
 Kuwait            1.500             1.7
 Libya             1.233             1.3
 Nigeria           1.611             1.7
 Qatar             0.371             0.4
 Saudi Arabia      5.380             5.4
 UAE               1.500             2.0
 Venezuela         1.945             2.0
 TOTAL            22,491            23.6
 * International Energy Agency estimates


GRAPHIC: Table, no caption

                   Copyright 1990 The Financial Times Limited

                             2606 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 29, 1990, Wednesday

OPEC and the crisis

SECTION: SECTION I; Editorial; Pg. 14

LENGTH: 678 words

IRAQ'S INVASION and attempted absorption of one member of the Organisation of
Petroleum Exporting Countries and its threatening behaviour towards others,
above all Saudi Arabia, could not leave the organisation unaffected. It has not
done so. Opec's response - perfectly sensible, in the circumstances - is to
hibernate for the duration of the emergency.

A formal meeting of the Opec Committee is to occur today, but what was agreed at
the informal meeting in Vienna yesterday is likely to stand. Despite some
misgivings, Opec members - apart from Iraq, Iran and Libya - will try to meet
their current aggregate target of 22.5m barrels a day, despite the loss of 4m
barrels a day from Iraq and Kuwait. In order to achieve this goal, they will
have to ignore previously agreed ceilings for individual countries.

The main spare capacity is in Saudi Arabia, the United Arab Emirates and
Venezuela, with some potential for increased supply from Libya and Nigeria. The
principal actor among these countries is Saudi Arabia, which now has more than
adequate cover for actions that it recognises as both inevitable and desirable.
Saudi Arabia could hardly be the beneficiary of current levels of military
support, without a quid pro quo of this kind. There are also wider interests at
stake. Oil prices that are too high or unstable are damaging to producers who
are in the business for the long term.

Controversial moves

None the less, these moves have proved controversial. One objection is that oil
prices are still about half the peak level reached (in real terms) during the
second oil shock. Oil exporters who have struggled with the debt contracted
during previous periods of high prices must feel relief at the sight of prices
rising again.

The level of stocks is a still wider concern. On paper, the planned increase in
supply should neutralise the effects of the UN-mandated embargo on the oil
exports of Iraq and Kuwait. But there might still be significant disruption,
since Opec production could have been considerably higher than the ceiling.

Private stock-holders know this. They also know that the threat of war remains.
They are likely, therefore, to speculate on further increases in prices. The
imbalance between supply and demand (including the demand for increased stocks)
could lead to rapid self-justifying price rises.

Reconsider approach

It is for this, entirely understandable, reason that Opec members wish to see
members of the International Energy Agency play a greater role in stabilising
the oil market. These countries must now reconsider their intellectually barren
approach to the use of official stocks. The role of these stocks should not be
to meet physical shortages that will, in a free market, never come. It should
rather be to mitigate an inventory-driven price cycle of the kind that proved so
destabilising during the last oil shock.

Meanwhile, Opec suppliers themselves could offer the increased output, on a
first refusal basis, to countries outside the principal distribution channels,
which were most directly dependent on oil from Iraq and Kuwait. These countries
are likely to consume what they are sent. Moreover, the disruption in
established patterns of distribution can be as destabilising in the short term
as any shortfall in aggregate supply.

This is particularly true of the market for refined products. Yet little can be
done about the difficulties in these markets. The world may well be able to
manage the supply and demand for crude oil. But the loss of Kuwaiti refining
capacity, on top of what was already a very tight situation, will create

Most members of Opec are, it appears, playing a constructive role in this
crisis. Given a forthcoming response from members of the IEA, severe disruption
might be avoided. This is not the only interest the two groups share. The Iraqi
President has invaded two Opec members and thus created two oil shocks. Opec
members share with the rest of the world an interest in ensuring that he is
deprived of the ability to do this a third time.


                   Copyright 1990 The Financial Times Limited

                             2607 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 29, 1990, Wednesday

Crisis in the Gulf;
Palestinian-Gulf link sought by Hussein



LENGTH: 226 words

KING Hussein of Jordan is canvassing other Arab governments over a demand for
international guarantees to solve the Palestinian problem in return for
settlement of the Gulf crisis.

Both he and Mr Yassir Arafat, chairman of the Palestine Liberation Organisation,
who have been attempting to mediate in the Gulf crisis, are evidently seeking
ways of building on Iraqi President Saddam Hussein's initiative two weeks ago,
in which he called for an Israeli withdrawal from occupied territories as a
precondition for any Iraqi pull-out from Kuwait.

This initiative was flatly rejected by the US and other western powers, and it
seems unlikely that the ideas now being floated by King Hussein and Mr Arafat
will command any greater international support.

Under the king's proposal, the demand for guarantees would be included in either
a Jordanian initiative or an Arab peace plan which would involve withdrawal of
all foreign troops from Kuwait and the Gulf.

The king, who has visited Yemen, Libya, and Tunisia in his current mediation
effort, is said to be stressing the need to freeze current military activities.

It remains unclear how he is treating the question of an Iraqi withdrawal from
Kuwait but Jordanian sources said the Kuwait crisis would be dealt with in the
context of an overall settlement of all the problems in the Middle East.


                   Copyright 1990 The Financial Times Limited

                             2608 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 29, 1990, Wednesday

Opec ready to back output rise


SECTION: SECTION I; Back Page; Pg. 16

LENGTH: 485 words

A SHARP increase in oil output is set to be approved by the Organisation of
Petroleum Exporting Countries to counter the shortfall on world markets caused
by the Gulf crisis.

The increase, backed by most Opec members at a meeting in Vienna yesterday,
would allow members of the organisation to compensate for the loss of about 4m
barrels a day of Iraqi and Kuwaiti oil exports.he agreement to suspend
production quotas is likely to be endorsed this morning by 10 of Opec's 13

The Opec move represents a political victory for Saudi Arabia and Venezuela
which have led the campaign to restore stability to world oil markets, where
prices have soared following Iraq's invasion of Kuwait.

However, North Sea Brent oil prices for October delivery fell Dollars 3.80 to
Dollars 26.25 yesterday against Friday's close, reflecting the Dollars 4 fall in
the price of crude on the New York Mercantile exchange on Monday - a holiday in
the UK. In New York yesterday oil prices closed firmer.

The fall in North Sea prices prompted Shell UK to shelve plans to announce a
further 18p increase in petrol prices.

The Opec agreement is expected to be opposed by Iraq and Libya, whose ministers
were absent from Vienna, and by Iran. Mr Gholamreza Aqhazadeh, the Iranian Oil
Minister, said he would oppose an immediate increase in Opec production unless
this was agreed in a joint action with the International Energy Agency, the
Paris-based agency responsible for co-ordinating the response of industrialised
countries to an oil supply shortfall.

Mr Aqhazadeh said he would propose to other Opec members that the meeting of the
organisation's ministerial monitoring committee, scheduled for 9am today, be
postponed for a week. In the meantime Opec should propose a joint meeting with
the IEA to consider co-ordinated action. This would involve an increase in Opec
production and a release of oil stocks in IEA countries.

Although Mr Aqhazadeh's wish for producer-consumer co-operation is widely shared
among Opec members, a majority is keen to sanction an immediate increase in
production. Opec observers believe oil output has already started to rise
rapidly, and that the agreement will merely provide political justification for
it and help restore Opec credibility.

The 10 Opec members reached agreement yesterday when they decided to turn an
informal consultation into a formal committee meeting. Libya, however, objected
from Tripoli that a meeting could not be held unless it was invited. Iraq and
Libya were subsequently sent invitations to the session this morning, although
they are thought unlikely to attend. Algeria, Nigeria, and Indonesia are
understood to have been cool to the agreement on the grounds that stocks in the
industrialised countries are plentiful. They backed the agreement in an evident
attempt to maintain unity.

Crisis in the Gulf, Page 2;

Editorial Comment, Page 14.


GRAPHIC: Picture, Iranian oil minister Gholamreza Aqazadeh surrounded
byreporters in Vienna yesterday

                   Copyright 1990 The Financial Times Limited

                             2609 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 28, 1990, Tuesday

Crisis in the Gulf;
Opec ministers attempt to set aside bitter disputes



LENGTH: 720 words

ELEVEN ministers from the Organisation of Petroleum Exporting Countries meeting
in Vienna yesterday were talking a great deal about achieving unity, in the face
of the deep divisions which the Gulf crisis has exposed in Opec.

Unity was certainly not in the cards, but all indications were that the
ministers were fashioning a declaration that would sanction an immediate
increase in Opec oil production and would be supported by a majority of Opec

The ministers were trying to formulate an Opec response to the loss of 4m
barrels a day of oil exports from Iraq and Kuwait and the soaring oil prices
caused by the Gulf crisis.

The effort, however, has been complicated by the occasionally bitter political
differences among members.

Of Opec's 13 members, only Iraq and Libya failed to show up for the informal
consultations called by Mr Sadek Boussena, the Algerian oil minister who is also
Opec president. The Libyan minister was expected to arrive last night, and was
thought likely to support Iraq's hardline opposition to any Opec production

Mr Gholamreza Aghazadeh, the Iranian minister, said yesterday that he also
opposed any immediate increase in Opec production.

Mr Boussena himself has faced the difficult task of working to keep Opec from
splitting further apart, while also defending the interests of his own country.
He appeared to be broadly succeeding.

Calls by Saudi Arabia and Venezuela to convene a formal ministerial conference
have been shelved. Instead, these countries were ready to accept an Opec
declaration endorsed by a majority of members that would sanction some kind of
production increase.

Both Venezeula and Saudi Arabia, which have up to 2.5m barrels a day of spare
production capacity between them, have indicated they would increase production
regardless of any Opec decision.

This stance by the two countries has caused some resentment among other members,
who feel they are being asked in effect to support US foreign policy goals of
defeating Iraq. This is in spite of resentment at Iraqi threats against other
Opec members should they raise production.

US ambassadors in various Opec countries are reported to have applied pressure
on oil ministers to support increased production and the effort appears to have
been counter-productive.

Delegates to the conference complain the US never showed the same degree of
concern during the debt crisis, and has made Opec out to be something of a
villain. Now the US appears to be asking for Opec help and this is resented.

There is also a strong view among some countries, such as Indonesia, Algeria,
and Nigeria, that the industrial countries should contribute to stability in oil
markets by releasing oil which is held in government and private stocks,
currently at high levels.

One Opec delegate suggested yesterday that strong action by the Paris-based
International Energy Agency, which represents the industrial countries, could do
more for market stability than anything which Opec did.

The disagreements were intensified by long-running differences between the
wealthy Gulf Arab states and other Opec countries that are large, poor, and
heavily indebted.

The ministers yesterday appeared gradually to be putting these differences
behind them and trying to formulate a sensible response to market developments.

A potentially serious shortage of oil was foreseen in the fourth quarter in the
absence of a rise in Opec production.

Any declaration, which some delegates expected to be hammered out by today would
sanction an increase in Opec production, although as a compromise the increase
may fall short of taking Opec production up to capacity.

Even at capacity, Opec is unable to replace fully lost Kuwaiti and Iraqi

The declaration would also be likely to make a strong appeal to industrialised
countries to release oil from stocks in a joint effort to bring stability

There were few expectations yesterday that any Opec action would have much
immediate impact on oil prices. These are seen to have been driven up in a panic
response to the Gulf crisis that bears little relationship to the underlying
supply and demand fundamentals.

The fast rise in oil prices has been supported by fears that an outbreak of war
could also disrupt exports from Saudi Arabia.


                   Copyright 1990 The Financial Times Limited

                             2610 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 28, 1990, Tuesday

South African protest call wins strong backing


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 363 words

TENS of thousands of residents of black townships near Johannesburg stayed away
from work yesterday to protest at violence which has left 515 people dead in the
past fortnight. A mass funeral was held to bury seven of the dead.

Organisers said the stayaway was rigorously observed in the largest black
township, Soweto, where only half of the township's buses were on the road.
Communal taxis, another popular form of transport, also reported a sharp decline
in passengers.

Schools in Soweto and East Rand townships where most of the victims have died
were largely empty.

Thousands attended a mass funeral at Jabulani stadium in Soweto, near the scene
of the first deaths in Soweto on August 16, but police reported no violent
incidents. Soweto and the East Rand have been mostly quiet since large numbers
of police and troops moved in at the weekend, following Pretoria's declaration
of an effective state of emergency in these areas and its decision to disarm
rival factions.

The Inkatha Freedom Party, the Zulu political movement, said 'intimidation and
fear' had stopped many people going to work. Inkatha supporters have been
involved in the violence of the past fortnight, the worst township violence in
South Africa's history.

However, the Mass Democratic Movement, the loose coalition of anti-apartheid
groups which called the stayaway, said it was impossible to intimidate such a
large number of people, adding that the turnout had reflected a 'very strong
feeling about the violence."

Pretoria has put increasing pressure on the African National Congress (ANC),
senior partner in the MDM coalition, to halt mass protest actions such as
stayaways, on the grounds that they inflame passions and often end in violence.
However, the ANC insists that mass action is one of its few remaining weapons
against apartheid, since its decision to suspend military operations.

Meanwhile Mr Nelson Mandela, ANC deputy president, has been sharply criticised
by South African newspapers for travelling to Norway, Libya and Algeria at a
time when the peace process in South Africa is under grave threat. On arrival in
Oslo, Mr Mandela blamed police for the violence.


                   Copyright 1990 The Financial Times Limited

                             2611 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 28, 1990, Tuesday

Pressure on Saddam intensifies ahead of UN talks


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 851 words

THE INTERNATIONAL pressure on President Saddam Hussein to withdraw Iraqi forces
from Kuwait intensified yesterday ahead of talks later this week between the
United Nations Secretary General and the Iraqi Foreign Minister.

In his strongest appeal to the Iraqi leader since the crisis began, President
Mikhail Gorbachev said that by invading and annexing Kuwait, Mr Saddam had taken
his country into a 'dead end'.

During talks in Moscow with Mr Esmat Abdel Meguid, the Egyptian Foreign
Minister, Mr Gorbachev said:'Political means are not exhausted, but maximum
effort is needed to avert an armed conflict.'

The Soviet statement came as the US said it would expel 36 Iraqi diplomats in
retaliation for restrictions on US diplomats in Iraq and occupied Kuwait, and as
the Iraqis continued to round up westerners in Kuwait.

At the same time there was a further flurry of Arab diplomacy aimed at staving
off hostilities. With negotiating moves underway, Iraq was reported to have
ordered its ships not to challenge the western naval blockade in the Gulf. Most
diplomatic attention is focused on an initiative by Mr Javier Perez de Cuellar,
the UN Secretary General, who plans to meet Mr Tariq Aziz, the Iraqi Foreign
Minister, in the Jordanian capital Amman on Thursday. Mr Perez de Cuellar said
he was intervening on his own initiative. He felt tension had reached such a
pitch that a personal effort was 'totally indispensable.'

However, he is expected to tell Mr Aziz that Iraq is unlikely to succeed in
initiating negotiations until it complies with the Security Council's Gulf
resolutions. These demanded Iraq's unconditional withdrawal from Kuwait, in
addition to imposing an economic embargo against Baghdad and sanctioning naval
measures - interpreted by the west to mean force - to back up the blockade.

Mr Perez de Cuellar, who will also meet Jordan's King Hussein, has the backing
of President George Bush and other western leaders for his efforts to find a
peaceful solution to the crisis.

But Mr Bush yesterday was not hopeful about a diplomatic solution. After meeting
Mr Brian Mulroney, the Canadian Prime Minister, he said the Iraqi leader had
been 'so resistant to complying with international law that I don't yet see
fruitful negotiations.'

While US officials are sceptical about what such talks may produce, they want to
give diplomatic efforts a chance. As a result, early pre-emptive military action
by the US against Iraq does not appear likely. Following the passing on Saturday
of a UN Security Council resolution authorising the enforcement of the trade
embargo against Iraq, Mr Brent Scowcroft, the President's national security
adviser, said the US strategy was in place and it was time to see whether it
would work.

As the fear of imminent hostilities eased yesterday, oil prices plunged by as
much as Dollars 4 a barrel, with Dubai, the Middle East benchmark crude, quoted
down Dollars 4.18 at Dollars 25.60 a barrel, and world stock markets rallied.

The international oil market was also watching ministers from the Organisation
of Petroleum Exporting Countries, meeting in Vienna. They were debating whether
to raise production to make up for the 4m barrels a day shortfall caused by the
interruption of Iraqi and Kuwaiti supplies.

It remained unclear how many Opec members would support such a proposal. Iraq,
whose minister did not come to Vienna, would be opposed, as would Iran. Algeria
was also said to be cool towards any immediate decision, and Libya, whose
minister had not arrived, was expected to support the Iraqi position.

In the Gulf both Iraq and the US-led military forces appeared keen to avoid
actions which might spark a confrontation. US officials said intelligence
reports indicated that Iraq had reversed earlier instructions to ships' captains
to ignore any attempts by US and other warships to search them and had now been
told not to defy the blockade.

The US has also reacted with caution to the passing of last Friday's Iraqi
deadline ordering the closure of embassies in Kuwait City.

Iraqi troops have surrounded the US, European and Japanese embassy compounds and
cut off water, electricity and telephone lines, but they have not carried out a
threat to close the embassies by force.

Iraq is continuing to allow a trickle of westerners - including yesterday 52
American women and children, dependants of US officials from Kuwait - to travel
from Baghdad to Turkey.

However, it prevented three US male dependants over 18 from leaving and nearly
50 officials have not been allowed to leave Baghdad.

Iraq paraded more detained Britons before the television cameras yesterday. A TV
programme showed an unidentified mother from Leeds lying in a hospital bed,
where the report said she had given birth to a baby boy.

Britain said Iraqi troops had rounded up eight more Britons in Kuwait, bringing
the total held to 157.

But the Foreign Office said Britain had no plans to follow the US in expelling
or restricting the movements of Iraqi diplomats.

Gulf crisis, Pages 2,3; Editorial comment, Page 16; Markets reaction, Page 18


                   Copyright 1990 The Financial Times Limited

                             2612 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 28, 1990, Tuesday

Crisis in the Gulf;
Baghdad's friends help find holes in sanctions net



LENGTH: 699 words

AS THE US and its allies seek to enforce tough UN-mandated sanctions on Iraq,
the Baghdad regime is trying to establish illicit supply routes for much-needed
commodities, raw materials and munitions.

The signs are that Iraq has wasted no time in its efforts to skirt the trade
embargo, and is being helped by a number of Arab states.

It is already becoming apparent that sanctions enforcement will be no easy task
in a region where the rules of the bazaar apply, and almost any transaction is
possible - at a price.

While Iraq's support among an Arab minority is by no means solid, it is likely
that it will be able to count on help from a small handful of its 'Arab
brothers' more or less through thick and thin.

Western experts note that Iraq has a large fleet of commercial passenger
aircraft, including Boeing 747s, capable of moving relatively large loads.
Baghdad's seizure of Kuwaiti commercial aircraft gives it additional carrying
capacity. Perhaps more important, it has also made off with a large quantity of
spare parts.

These experts note that the rebel state of Rhodesia managed to defy
international attempts to bring it to its knees for several years in the
mid-1960s by running a sanctions-busting operation.

Rhodesia made clever use of unmarked aircraft both to export goods to secure
precious foreign exchange, and import items such as spare parts and arms that it
had purchased on the open market.

It would be surprising if some of Iraq's commercial aircraft, with their
distinctive green markings, were not already being painted a more neutral color
to avoid identification.

Israel has long used unmarked Boeing 707s to conduct a good deal of shadowy
business, especially in the arms trade, with some of its more dubious clients
who would not be anxious to advertise their source of supply.

But western experts say that Iraq's great disadvantage lies in the fact that
oil, its only source of income, can only be moved by sea. This should make it
relatively easy for the international community to choke off exports almost

It is estimated that since the crisis began, Iraq has lost about Dollars 1.5bn
(Pounds 800m) in oil revenue. Sanctions busting, especially if it involves arms
purchases on the black market, is an expensive business. Moving bulk
commodities, such as wheat, by air is also costly.

On the positive side for Iraq, however, there appears no shortage of
transshipment points in the region for sanctions-busting activity. While
countries such as Yemen and Jordan, for example, have said they will apply the
UN sanctions, both are wavering.

Jordan's King Hussein, under pressure from all sides and most particularly from
his own people, who appear overwhelmingly to support Iraq in the present crisis,
has said he is seeking further clarification from the UN on exactly what is
involved as far sanctions on food are concerned.

Yemen has said repeatedly that it will abide by the trade embargo, but it was
clearly in breach of the UN sanctions resolution last week when it allowed an
Iraqi tanker to unload oil in Aden under a 30,000 b/d agreement with Baghdad.
There have also been unconfirmed reports of Iraqi aircraft loading food and
other supplies in Yemen.

Libya, the only state to vote with Iraq against the emergency Arab summit
resolution on August 10 committing troops to Saudi Arabia, is reported to have
sent armoured cars, chemicals and other materiel to Baghdad over the weekend.

Other potential supporters, include Sudan, Algeria and Mauritania, together with
the PLO, Yemen and Jordan, abstained on the August 10 resolution.

Closer to home, Iraq might be hoping that its 750-mile border with Iran will
prove porous enough for some supplies to get through. Iran insists that it will
apply the embargo.

However, in the murky world of the international arms trade and in the wheeling
and dealing that is characteristic of the Middle East, Iraq is certain to find
many holes in the sanctions net.

The question is whether it can meet the demands of its 17m people, plus more
than 1m in Kuwait, and at the same time keep itself on a war footing. It will
not be easy, even with a little help from its friends.


                   Copyright 1990 The Financial Times Limited

                             2613 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 28, 1990, Tuesday

Markets rebound as tension eases;
Talks initiative raises hope of diplomatic solution to Middle East crisis


SECTION: SECTION I; Back Page; Pg. 18

LENGTH: 461 words

EQUITY MARKETS rebounded yesterday in response to hopes of a diplomatic solution
to the Gulf crisis and a drop in the price of oil.

On Wall Street, the Dow Jones Industrial Average closed up 78.71 at 2,611.63 as
new-found optimism unleashed bargain-hunting after last week's falls.

Easing oil prices were the cue earlier for stock market rises in the Far East
and Europe. Gold, on the other hand, lost ground, falling Dollars 27 in New

Oil prices slipped as members of the Organisation of Petroleum Exporting
Countries neared agreement on increasing production to make up for the embargo
on oil from Iraq and Kuwait. Late last night 10 of the 13 Opec members were
ready to endorse increases. Iraq and Libya were absent from the talks, while
Iran had still to indicate its position.

In New York, October West Texas Intermediate futures were quoted Dollars 4 a
barrel lower at Dollars 26.91.

The recovery in equity markets was led by the Far East, where Tokyo's Nikkei
average closed up 976 at 25,141.76. This was the exchange's seventh-biggest
one-day gain. With Europe also taking heart, Frankfurt gained 6.1 per cent. The
trend continued early today, with Tokyo up nearly 740 by mid-morning.

On Wall Street yesterday, the Dow Jones Industrial Average jumped more than 50
points within 10 minutes of the opening bell and then steadily added to its
gains, closing near its day's peak.

The Treasury bond market also surged, taking the benchmark long bond 1 1/2
points higher and its yield to just below 9 per cent. After an initial burst of
activity, trading calmed down. 'Hysteria can be exhausting,' one trader said.

Bond dealers started speculating again about whether the US Federal Reserve
would move to ease monetary policy. The Fed is clearly worried about recession,
but is likely to wait until financial markets stabilise and crude oil prices
settle before making a judgment.

Currencies had a volatile day, especially the dollar, which has suffered from
loss of its traditional safe-haven status and the weakening US economy. It was
fixed at a new low of DM1.5411 in Frankfurt but recovered to DM1.55 in late New
York dealings. London's markets were closed. Early today in Tokyo the dollar was
weaker against the yen and D-Mark.

Sterling lost ground against both the dollar and D-Mark. Mr Avinash Persaud of
UBS Phillips and Drew said:'Its allure has been tarnished by the easing of
tension in the Middle East. But traders' expectations of an entry into the
exchange rate mechanism of the EMS are providing a floor for the currency.'

In Tokyo, the pound lost a cent against the dollar to trade at Dollars 1.9455.
In New York, it closed at Dollars 1.9425.

Economics notebook, Page 19; Bonds, Page 24; World stocks, Pages 26 and 34


                   Copyright 1990 The Financial Times Limited

                             2614 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 25, 1990, Saturday

Crisis in the Gulf;
Arab talks make little progress



LENGTH: 262 words

ARAB leaders are continuing their faltering efforts to defuse the Gulf crisis,
but at the end of the the third week there was little sign of progress.

King Hussein of Jordan, who complained on Wednesday about a 'world gone mad',
visited the capitals of Yemen and Sudan, neither of which could be described as
central figures in the crisis.

The two countries, with Jordan, Libya, Tunisia and the Palestine Liberation
Organisation, have been more supportive of Iraq than the moderate majority led
by Egypt.

Before embarking on his latest peace drive, the king said he wanted to 'avert
the kind of explosion which could easily occur by calculation and miscalculation
in a way which would have a devastating effect on the region and world.'

In Washington, Kuwait's ambassador, Sheikh Saud Nasir al-Sabah, expressed little
confidence in the king as a mediator. Mr Yassir Arafat, PLO chairman, is seeking
a mediating role.

He has put forward a number of plans since Iraq invaded Kuwait on August 2, but
there is no sign that any is being taken seriously.

Egypt is pressing ahead with its plans for an emergency Arab League Foreign
Ministers' meeting in Cairo on August 30. Iraq is not expected to attend. Egypt
wants to keep diplomatic pressure on Iraq. Officials say they intend to block
Iraq and its allies shifting attention from what Cairo sees as the central
issue:the inadmissibility of seizing territory by force.

Baghdad has been seeking to turn the dispute into a conflict between Arabs and
the West, and Arab 'haves' and the 'have-nots' of the Gulf.


                   Copyright 1990 The Financial Times Limited

                             2615 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 24, 1990, Friday

ANC and Inkatha delegations to meet


SECTION: SECTION I; Back Page; Pg. 16

LENGTH: 380 words

HIGH-LEVEL delegations from the African National Congress and Inkatha, South
Africa's main rival black political movements, are to meet soon, paving the way
for possible talks between Mr Nelson Mandela and Chief Mangosuthu Buthelezi,
their leaders.

The move represents a concession by the ANC, which has resisted dialogue with
Inkatha. It follows fighting in townships around Johannesburg between supporters
of the two organisations which has claimed the lives of 500 during the past 11

The townships were quieter yesterday following nearly 100 deaths on Wednesday.
The exception was Kagiso, on the East Rand, where police used teargas and
shotguns in an attempt to disperse a crowd of 2,000 residents seeking to attack
residents of migrant worker hostels who are loyal to Inkatha.

Mr Pallo Jordan, ANC national executive committee member, said yesterday the
agreement on talks 'does not necessarily imply a meeting with Mandela, but does
not exclude that possibility.'

State President F.W. de Klerk has urged that the meeting should take place as
soon as possible. He said that in separate meetings he had held with Mr Mandela
and Chief Buthelezi, he had insisted that the current spate of violence in black
townships should 'be brought to an end through strong leadership from all

Mr Jordan said talks with Inkatha would form part of a wider effort to help stop
fighting in the townships - implying that such talks were necessary to deal with
the problem, but would not by themselves solve it.

The ANC does not believe Inkatha alone could have carried out violence on the
scale witnessed, speaking darkly of a 'hidden hand' orchestrating the violence.

It had resisted a meeting on the grounds that this would lend undue national
legitimacy to Inkatha, which it argues is a Zulu organisation with a power base
confined largely to Natal province.

The ANC said its initiative to establish talks with Inkatha would be undertaken
by a four-person ANC commission on violence set up last month. It is headed by
Mr John Nkadimeng and includes three other members of its national executive:Mr
Thabo Mbeki, Mrs Gertrude Shope and Mr Jacob Zuma.

Mr Mandela leaves tomorrow on a visit to Nordic countries as well as Libya and
Algeria, returning on August 31.


GRAPHIC: Picture, Kagiso women, engulfed in a cloud of police tear gas,
makepeace signs

                   Copyright 1990 The Financial Times Limited

                             2616 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 24, 1990, Friday

Crisis in the Gulf;
Moscow's reluctance annoys Washington



LENGTH: 529 words

PRESIDENT George Bush has called Soviet co-operation over the Gulf crisis
'superb', but Moscow's reluctance to support the use of force in making the UN
embargo against Iraq stick is testing Washington's patience.

Mr Bush wants the UN Security Council to approve a US resolution on the use of
force as soon as possible, so that the US navy would have 'UN cover' for
interdiction of Iraqi shipping. But Moscow, wary of the dangers of a military
confrontation, is pressing to give diplomacy more time to work. Some US
officials suspect that the Kremlin may be positioning itself as a potential
mediator between the US and Iraq, its long-time ally.

A second, murkier issue concerns the status of Soviet military advisers in Iraq,
and reports of continuing Soviet military supplies to the Baghdad regime. The
State Department said yesterday that the US has had several diplomatic exchanges
with Moscow, adding:'Our general impression is that there are perhaps
significantly more Soviet personnel related to military activities' than the 193
reported by Moscow.

Mr James Baker, US Secretary of State, has assumed the task of ironing out these
differences. While on holiday in Wyoming, he has been receiving daily messages
from Mr Eduard Shevardnadze, Soviet Foreign Minister.

Keeping the Soviet Union inside the US-led international coalition is an
important part of Mr Bush's strategy for dealing with Iraq. Soviet support helps
to prevent the Gulf crisis being cast as a US-Iraq conflict, and it avoids the
threat of a Soviet veto which would paralyse the UN Security Council, the
designated vehicle for economic and diplomatic action against Baghdad.

The Soviet Union wants clear evidence of Iraqi sanctions-breaking before it
lends support for a UN resolution to back force. Also, it challenges the US
assertion that the exiled Kuwaiti government's request for assistance gives
Washington adequate legal authority to enforce sanctions. Some US policy-makers
are concerned that the Soviets may be using differences of timing and tactics to
frustrate US action. Moscow's proposal for reviving the moribund UN Military
Staff Committee is viewed with suspicion. The issue of Soviet military advisers
in Iraq, and the question of whether Moscow was forewarned about the Iraqi
invasion of Kuwait, remain sensitive. Two weeks before the invasion,
Major-General Albert Makashov, an influential Soviet officer, arrived in
Baghdad, according to western intelligence leaks.

The Washington Times reported that Soviet support for Iraq included two ships
which docked at the Jordanian port of Aqaba last weekend, including one with
spare parts for Mi-17 helicopters and for troop transporters, a Dollars 150m
line of credit at a Soviet bank arranged after the invasion, and the Balgues, a
ship of unspecified registry, carrying Soviet weapons purchased from Poland. The
ship was diverted to Libya, whence the arms are being airlifted to Iraq.

This week in Moscow, Soviet officials have cited 'contractual obligations'
governing its relationship with Iraq, and said the Soviet military was finding
it difficult to switch from 'full-blooded relationship to a total zero'.


                   Copyright 1990 The Financial Times Limited

                             2617 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 24, 1990, Friday

Crisis in the Gulf;
W Germans take a close look at chemicals groups



LENGTH: 688 words

WEST GERMAN judicial authorities are investigating 59 German companies over
alleged offences concerning delivery of armaments equipment to Iraq, above all
connected with chemical weapons, the Bonn government said yesterday.

A total of 25 companies are being examined by public prosecutors in connection
with alleged criminal activities, while another 34 are under investigation over
irregularities which would be met by financial penalties, the Economics Ministry
said yesterday.

Ms Hildegard Hamm-Brucher, the veteran Free Democrat Bundestag deputy, whose
question sparked off yesterday's parliamentary reply, told the Financial Times
that West Germany's policy over weapons exports was 'hypocritical'. She called
for the government to make a fundamental policy switch to allow much greater
Bundestag control over exports of military equipment and know-how.

Mr Norbert Gansel, a Social Democrat deputy who is one of the party's foreign
affairs experts, said it was 'macabre' that Germany's Iraqi connections were
hitting the headlines at a time of crisis in the Gulf. Mr Gansel, a tireless
campaigner against German armaments exports to the Third World, said
investigations against German companies supplying equipment to Iraq for chemical
weapons had been proceeding for about four years.

Most of the transactions are believed to have taken place between 1983 and 1987,
according to officials at the Darmstadt public prosecutor's office, which is
co-ordinating inquiries over the chemical weapons. The judicial investigations
are expected to be completed by the autumn.

Six arrests

One senior western ambassador in Bonn said yesterday that Germany's involvement
in the Iraqi chemical weapons build-up was 'abominable'.

As part of the investigation, customs officials last Friday rounded up seven
people working for German companies suspected of illegal involvement with Iraq.
Six people were arrested, including Mr Al Khadi, a former agent of West
Germany's foreign intelligence service, the Bundesnachrichtendienst (BND), with
the seventh person not taken into custody on health grounds.

The main companies involved in last week's swoop are Hamburg-based Water
Engineering Trading (WET) and Pilot Plant, an affiliate of Karl Kolb, the
Hesse-based engineering company which has been in the public eye for several
years over dubious Iraqi deals.

Preussag, the large north German metals and energy group, has been the object of
inquiries over the activities of its past employees. Preussag said that Mr Al
Khadi had formerly worked for the company but was fired in 1985 after discovery
of his involvement in setting up WET.

Weapons site

Yesterday's Economics Ministry statement said that investigations were focused
on German involvement in the Iraqi weapons site at Tadji near Baghdad, as well
as on the Samarra chemical weapons complex.

Mr Gansel claimed that the US government had lodged around 1,000 inquiries to
the West German government over the last five to six years concerning German
deliveries of sensitive materials to countries such as Iraq, Syria and Iran.

The US has made no secret in recent years of its concern over lax German export
controls over exports of militarily-useful equipment and components to the
Middle East and other areas of tension. Bonn has brought in tougher export
control laws since the debacle over German companies' involvement in building a
poison gas factory for Libya, which came to light at the beginning of last year.

Critics such as Ms Hamm-Brucher and Mr Gansel, however, claim that the
tightening does not go far enough. Many engineering companies involved in Iraqi
business have clearly turned a blind eye to military connections.

Mr Egon Heberger, from the construction company Heberger Bau, said his company
won a contract for the Samarra factory in 1983. 'At the time we received the
order, not a single chemical weapon had been used by Iraq. By the time we had
finished our part of the project, there were rumours it could possibly be used
for chemical weapons.' He said he had turned down a second contract for the same
kind of pesticide factory.


                   Copyright 1990 The Financial Times Limited

                             2618 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 23, 1990, Thursday

The risks of a long siege in the desert



LENGTH: 1730 words

David White and Lionel Barber look at the military build-up in the Gulf

Every 10 minutes, a US heavy-lift military transport aircraft lands in Saudi
Arabia. Every minute, the Gulf build-up is reckoned to cost the US Dollars

Three weeks after Iraq stormed Kuwait, Americans and their allies still seem
more prepared for a long, hot siege of Iraq than for the bloody showdown that
many media reports anticipate. But for how long?

The factors that will determine whether the US leads a war against Iraq are not
only the intentions of President Saddam Hussein, but also the inherent
volatility of such an amassing of military strength and the domestic US politics
of a prolonged stalemate.

The risk of fighting being touched off must be high. A local flare-up or an
unforeseen escalation in the foreign citizens issue would have unpredictable
consequences. Many already suspect the US of waiting for a casus belli. They
argue that the level of forces Washington is building up to - much greater than
initially supposed - are such that the country would not be prepared to sustain
them indefinitely.

Since the trauma of defeat in Vietnam, Americans have proved reluctant to
support long-term overseas military commitments. President George Bush, it
seems, has learned a lesson from Vietnam by clearly articulating US interests in
the Gulf and pursuing a rapid - not incremental - military concentration.

By invoking the memory of the Second World War, he has strengthened the
prevailing mood in Washington that a military confrontation with Iraq is

The bell has already been tolled by Mr Henry Kissinger, Secretary of State when
the US was last at war, in Vietnam. 'The United States has in fact passed the
point of no return . . . In any event, neither Arab nor American politics would
long sustain significant troop deployments in Saudi Arabia . . . If after a
certain interval the conflict appears to settle down to a siege, the United
States will be obliged to consider new measures to bring it to a conclusion.'

The US, he said, might soon be forced 'to consider a surgical and progressive
destruction of Iraq's military assets.'

But despite the heated rhetoric, analysts of the US military posture question
the assumption that Washington is preparing to wage war on Iraq. 'There is no
evidence to suggest that it is even being contemplated,' argues Group Captain
David Bolton, director of the respected Royal United Services Institute in

Both US and British experts say the allies do not yet have sufficient forces for
a military initiative - even with 30,000-40,000 US troops and airmen in place,
45,000 marines being dispatched and an armada of warships being assembled in and
around the Gulf from as many as 10 western countries.

US, British, Saudi and other Arab forces should be able to blunt an Iraqi land
attack. They have a range of anti-armour weapons including Apache battlefield
helicopters, the most powerful in the west's armoury, used for the first time in
last year's Panama operation. Fighters such as the RAF's Jaguars, operating from
well-defended bases, could mount an air war against Iraqi tanks and their

Iraq's Scud missiles would be among the first targets in such an action:a prime
concern since there is no way of shooting them down. However, the Scuds are
inaccurate. Iraq could use them for an 'air burst' chemical attack, but experts
say the impact would be haphazard and chemical agent would evaporate relatively
quickly in the are doubts about the military effectiveness of such
weapons, in comparison to the retaliation they would provoke.

The structure of forces being placed in Saudi Arabia is still seen as deterrent
in nature. It would be a different matter to mount a sustained attack on Iraqi
forces in Kuwait or through Iraq itself.

If conflict is joined, any war effort against Iraq would be largely conducted
from the air, where the US and its allies have their main strength. Once it had
control of the skies, the US would move quickly to 'take out' as much as
possible. That would require first destroying the Iraqi air force which,
according to Colonel Michael Dewar, deputy director of the International
Institute for Strategic Studies, would take 'at least 48 hours of war.'

The US, Britain and Saudi Arabia have a range of modern air-to-air fighters -
including F-15s and Tornados - and attack aircraft at airports in the Gulf,
backed up by carrier-based air power. Four of the US navy's 14 carrier battle
groups, the most potent display of the country's military might, are either in
or on their way to the area.he US could back this up with land-attack cruise
missiles deployed on several of its ships.

Iraq has a handful of the latest Soviet MiG-29 fighters and Su-24 long-range
strike aircraft, but its air force is mostly old. It has an array of air
defences, based on Soviet and French surface-to-air missiles, but its opponents
would have a significant advantage in the use of electronic countermeasures.
Moscow is believed to have added to this advantage by providing details of the
electronic 'fits' of Soviet-supplied weapons. Western military planners also
believe Iraq lacks co-ordination and all-weather day-and-night capability.

The firepower that could be mustered for 'surgical' strikes includes the F-117A,
the intriguing Stealth fighter used for the first time, with rather inconclusive
results, in Panama. There would also potentially be heavy B-52 bombers flying
out of Diego Garcia in the Indian Ocean, F-15E long-range strike fighters from
Oman, F-111s out ofurkey, and carrier-based A-6 medium bombers. The latter two
were used for the US raid on Libya in 1986.

But tactics for such bombing attacks would be complicated by the use of hostages
as a shield. 'It would be extremely difficult,' one air force expert admitted,
'to mount a surgical operation to such a degree of accuracy to take into account
those civilians who would be injured. It's beyond our capability.'

And would bombardment be enough to make Mr Saddam sue for peace? Military
analysts fear that such a war might be difficult to bring to a conclusion. The
classic military argument is that air power would have to be backed up on the
ground. 'The advocates of air power are adamant,' says Mr Seth Carus of the US
Naval War College, 'but they are dead wrong.'

Experts believe US forces now deployed are not 'remotely' adequate to wage an
offensive war against Iraq, even with 45,000 marines being dispatched. The 82nd
Airborne, the 1st Marine Expeditionary Force, the 101st Airborne and the 7th
Infantry Division have between them only a couple of tank battalions. Only the
24th Mechanised Division is suited to the terrain, and at present only deploys
one brigade. Saudi ground forces do not bridge the tank gap.

'There is a history of Iraqi forces being resilient in their own country,' says
one expert. Iraq is believed to have 1,000 tanks and well over 100,000 men in
Kuwait, where diplomats say they are defensively deployed.

Despite the rhetoric, the Bush Administration still appears committed to the
two-pronged, largely defensive strategy:a military build-up to buttress Saudi
Arabia against attack, and the pursuit of diplomatic and economic sanctions to
isolate Baghdad. For the moment, the accent seems more on collective rather than
unilateral US action.

Events over the next two days may, however, force Mr Bush and his advisers to
rethink. Various uncertainties must have surfaced at yesterday afternoon's
strategy session at Kennebunkport between the President, General Colin Powell,
chairman of the Joint Chiefs of Staff, and Mr Richard Cheney, the US Defence
Secretary, just back from his second mission to the Gulf in a fortnight.

The potential flashpoints are all too visible. What will Washington's response
be to the threatened closure tomorrow of the US and other foreign embassies in
Kuwait? How far will the US go in using force to prevent Iraqi tankers from
delivering their cargoes and breaking the blockade? And, perhaps the most
wrenching policy decision of all, how does Mr Bush intend to cope with the
emerging hostage crisis.

Some US observers conclude that Mr Bush must act forcefully in the next few
days, or risk becoming a hostage to events as President Jimmy Carter did in his
dealings with Iran 10 years ago.

There are three main scenarios for an outbreak of war. The first would be a
decision by Mr Saddam to lash out. Analysts see only two options for this:into
Saudi Arabia, which would now be difficult, or through Jordan to provoke a
reaction by Israel. 'That,' says Group Captain Bolton, 'would risk embroiling
the whole Arab world in a conflict of almost global proportions in which he
himself would not survive.'

The second scenario would be a flare-up. Patrolling is going on by both sides
near the Kuwait-Saudi border. Iraqi aircraft have been engaged in an electronic
cat-and-mouse game, testing the other side's air defences. If there were an
incident, some believe both sides would try to contain it rapidly. But how would
the US react to a repeat of Iraq's 1987 accidental air attack on the USS Stark
during the Iran-Iraq war?

The third scenario would be an attack initiated, with or without an immediate
pretext, by the US and its allies. According to some, the forces deployed in
Saudi Arabia might soon be in a position to attempt to remove the Iraqis from

They cannot be described as purely defensive, since almost any weapon, even
anti-tank weapons, can be used offensively. They certainly include a capacity to
counter-attack and retaliate, as part of the siege tactic.

But military analysts say that even if the US were to commit the full
250,000-300,000 troops now being talked about, to invade Iraq would require
twice that number.

An amphibious attack modelled on MacArthur's successful Inchon assault in Korea,
mooted by some, would be hard to mount, and would face Iraqi shore-to-ship
missiles with ranges up to 200km.

The US airborne troops in Saudi Arabia are seen as 'ground-holding' rather than
attacking forces. Experts believe that the US would need much more by way of
heavy armour than the 24th mechanised infantry division can provide. If
Washington opted for other reinforcements, it would take about six weeks to get
three to four armoured divisions in place. Until then, the US would be unlikely
to initiate a war - unless it is forced into it.


GRAPHIC: Picture, no caption; Picture, no caption; Picture, The US and its
allies amass their military might, top theF-117A, or Stell fighter, left, the
USS Independence aircraft carrier,right, a soldier from the RAF regiment

                   Copyright 1990 The Financial Times Limited

                             2619 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 22, 1990, Wednesday

Crisis In The Gulf;
Yemen bows to sanctions pressure

BYLINE: Our Foreign Staff


LENGTH: 556 words

YEMEN last night denied reports that an Iraqi tanker had unloaded at an oil
refinery in Aden, as Arab states showed further signs of distancing themselves
from President Saddam Hussein of Iraq.

President Hosni Mubarak of Egypt, meanwhile, made his most impassioned plea yet
to President Saddam to avoid what he described as a 'vicious war that won't
result in anything but destruction.'

Controversy about Yemen's role in the Gulf crisis reached a new height when
reports from Aden said the Iraqi tanker Ain Zalah had docked and unloaded at a
refinery. Two more Iraqi tankers were reported to be waiting off Aden, including
one at which US warships fired warning shots last Saturday.

'This is a clear breach of the United Nations oil trade ban,' an oil industry
executive in the Gulf claimed.

Yemeni Foreign Ministry officials in Aden said the cargo had left Iraq before
the imposition of sanctions.

Later Yemen's ambassador at the UN, Mr Abdullah Saleh al-Ashtal, conceded an
Iraqi vessel had docked but said no cargo was unloaded. It was not a breach of
UN sanctions to allow Iraqi ships to dock, he said. 'The point is that the cargo
should not be unloaded.'

Yemen and Cuba abstained when the Security Council voted on August 6 for UN
economic sanctions against Iraq for refusing to withdraw from Kuwait. But Yemen
gave an assurance yesterday that it would abide by sanctions against Iraq, after
coming under pressure to do so during consultations among UN Security Council

Its UN ambassador said he believed the sanctions were 'really taking hold' but
they should not be enforced unilaterally outside UN authority.

Egyptian television and radio interrupted its normal programmes to broadcast the
emotional appeal which President Mubarak addressed to 'our brother President
Saddam Hussein'. Its tone reflected increasing alarm throughout the Arab world
at the looming dangers of war.

Mr Mubarak's plea, which was issued 'in the name of every man, woman and child
on our Arab land', coincided with a flurry of diplomatic activity throughout the

Mr Dick Cheney, US Defence Secretary, stopped at Cairo airport for a brief
meeting with his Egyptian counterpart, General Youssef Sabri Abualeb.

Cairo and Washington are talking about a new arms agreement; Egypt is believed
to be seeking more F-16 fighters. US military grant assistance to Egypt is
runnning at about Dollars 1.3bn a year.

Mr Farouk al-Sharaa, Syria's Foreign Minister, also visited Cairo yesterday for
talks with Dr Esmat Abdel Meguid, his Egyptian counterpart, as Syria confirmed
it had sent troops to assist in the defence of Saudi Arabia. Diplomats in
Damascus said 1,200 Syrian troops were already in the kingdom.

The two men are understood to have discussed Egypt's call for an emergency Arab
foreign ministers' meeting this weekend.

The PLO seems to be having second thoughts about its earlier support for Iraq.
Its statements have become more equivocal and in London its representative has
called for a fresh summit to review the Gulf crisis.

At an emergency Arab summit in Cairo on August 10 the PLO appeared to vote with
Libya and Iraq against a resolution calling for the despatch of an Arab
deterrent force to Saudi Arabia. It announced several days later that it had
abstained and that there had been a misunderstanding.


GRAPHIC: Picture, Marines from US Fighter Attack Squadron 113 prepare to
loadSidewider missiles scheduled for deployment to the Middle East

                   Copyright 1990 The Financial Times Limited

                             2620 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 21, 1990, Tuesday

Crisis in the Gulf;
PLO tries to please Riyadh and Baghdad



LENGTH: 792 words

Tony Walker finds Arafat tripping over himself as he tries to face both ways

A FEW days after the August 10 emergency Arab League summit in Cairo that voted
to send troops to Saudi Arabia, al-Ahram, the Egyptian daily, published a most
unflattering cartoon of Yassir Arafat.

It depicted the PLO chairman as a pair of identical Siamese twins facing in
opposite directions - one twin was following a sign that read 'occupied Kuwait,'
the other a sign that said 'occupied Jerusalem'.

The twinned Arafats was each carrying a placard. One read 'Vive taking
territories by force,' and the other 'Down with taking territory by force.'
Al-Ahram, it might be said, had gone for the jugular.

Not only did the cartoon reflect the parlous state of PLO-Egyptian relations, it
also neatly summed up Mr Arafat's dilemma as once again he found himself mired
deep in the quicksands of Arab politics.

On one hand, he felt he could not afford to offend Iraq which has emerged in the
past eight years, and most conspicuously since the collapse of the peace process
in February, as the PLO's chief patron and the haven for about two-thirds or
5,000 members of its army.

On the other, the PLO leader risked offending the moderate pro-western Gulf
states that have been his most reliable financial backers.

That financial support, which has amounted to literally billions of dollars over
the years - some estimates put the contributions of the wealthy Gulf states at
Dollars 10bn over the past two decades - is now at risk.

Most ominous for Mr Arafat is the displeasure of Saudi Arabia which has not only
been a steadfast supporter of the PLO itself, but more important for the PLO
chairman, it has poured money over the years into the coffers of his own Fatah
faction, helping it to become easily the best-financed and most powerful among
all the the guerrilla organisation's disparate groups.

That Mr Arafat finds himself in serious trouble with the Saudis was underscored
by his most unsatisfactory private audience with King Fahd during the Cairo
summit. The Saudi monarch was reported to have listened in silence to a long
demarche by Mr Arafat on the rights and wrongs of the Gulf crisis, and then to
have signalled the interview was over by getting up and walking out of the room
without a word.

The deliberations of the summit itself scarcely proceeded any more
satisfactorily for the PLO chairman. Not only did he engage in an unseemly row
with an Egyptian journalist in the corridors, he also criticised the conduct of
the gathering itself in which he claimed the majority, led by Egypt, had
railroaded through a resolution that in effect killed any chance of mediation.

Mr Amr Musa, Egypt's UN representative and a prominent member of the Egyptian
summit delegation, announced to the press that the PLO had joined Iraq and Libya
in opposing a resolution that denounced the Iraqi invasion of Kuwait and called
for the despatch of an Arab force to help protect Saudi Arabia.

Two days later, the PLO issued a statement in Tunis in which it denied having
voted against. Rather, it said it had abstained. 'The vote took place in
indescribable disorder and the PLO abstained...' said a PLO spokesman. This is
by no means the first time the PLO has found itself out on something of a limb -
its history is littered with problematical alliances made for reasons of
expediency - but equally there is no doubt that the Gulf crisis and the
divisions it has caused in the Arab world are a truly ominous development for Mr
Arafat and his colleagues.

While Palestinians of the West Bank and Gaza Strip, and Jordan have loudly
expressed their support for Saddam Hussein, those among 700,000 resident in the
Gulf have expressed strong opposition. In Tunis there has also been
disagreement, particularly over the presentation of the PLO position that gave
an initial impression of support for Iraq, but ranks have closed in recent days,
partly in response to what is seen as an international press campaign, in which
the Egyptians are playing no small part.

Mr Khaled al-Hassan, a senior figure in Mr Arafat's Fatah mainstream and a man
who has long been close to the Kuwaiti government - he has lived in Kuwait for
many years - accused Egyptian newspapers of 'lying unbelievably' about the PLO

Mr Mohammed Milhem, a member of the PLO's Executive Committee said that the
organisation 'could not be so clearcut' in its statements on the conflict.

Mr Arafat has sent envoys flying all over the Middle East to explain the PLO
position and to mend fences. They are certain to find the going difficult. The
PLO, caught partly by its own miscalculations and partly by circumstance, has
expended much political capital.

This is the fourth article in a series on countries and parties involved in the
conflict in the Middle East.


GRAPHIC: Picture, Protesters tread on the US and British flags in a rally
inRuseifeh, Jordan, in support of Iraq

                   Copyright 1990 The Financial Times Limited

                             2621 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 21, 1990, Tuesday

Saudi oil boost after Opec split


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 513 words

SAUDI ARABIA was last night preparing to increase oil production rapidly after
the Organisation of Petroleum Exporting Countries rejected its call for an
immediate ministerial meeting.

Mr Hisham Nazer, the Saudi oil minister, had called for an extraordinary Opec
conference to formulate a response to the loss of oil supplies caused by the
Gulf crisis. He also warned that Saudi Arabia would unilaterally lift production
by up to 2m barrels a day if Opec failed to meet.

The Saudi decision to make public its break with Opec, which signed a production
agreement in Geneva on July 27, will make it politically easier for other Opec
members to lift production. Venezuela and the United Arab Emirates are expected
to increase production by 500,000 b/d each, while Nigeria and Libya are each
capable of increasing output by several hundred thousand b/d.

These supplies could make up more than 80 per cent of the 4m b/d which had been
exported by Kuwait and Iraq. Petroleum Intelligence Weekly, the oil industry
newsletter, yesterday reported a surge in Iranian production of 350,000 b/d to
3.5m b/d, although this may prove unsustainable.

Oil prices rose again yesterday, with Brent oil for October delivery closing up
nearly 47.5 cents at Dollars 27.375 a barrel.

The price increase confounded expectations that the Saudi pledge to increase
output would calm the market. Instead fears intensified that armed conflict in
the Gulf may disrupt Saudi production. A statement from Opec said that a
majority of Opec members failed to support the Saudi call for an extraordinary
meeting. Iran and Iraq have flatly opposed any meeting. Indonesia said it would
support a slimmed-down gathering, while other Opec members worried that a
meeting would only end in disarray.

The Saudi call is believed to have been supported by Venezuela, the UAE, Qatar,
Kuwait, and Ecuador.

Lex, Page 12; Editorial Comment, Page 14

New York:
dollars 1.9130 (1.9225)
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pounds index 95.8 (95.3)
New York: Comex Dec
dollars 418.8 (418.3)
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N SEA OIL (Argus)
Brent 15-day Oct
dollars 27.375 (26.9)
Tokyo open: Y146.325
New York
DM 1.5655 (1.549)
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SFr 1.2965 (1.283)
Y 146.415 (147.585)
DM 1.5575 (1.549)
FFr 5.235 (5.205)
SFr 1.2915 (1.2825)
Y 146.75 (147.5)
dollars index 63.3 (63.4)
Fed Funds 7 15/16% (8 1/8)
3-mo Treasury Bills:
yield: 7.78% (7.72)
Long Bond:
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Tokyo: Nikkei
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3-month interbank:
closing 15 (15-15 1/32)
Liffe long gilt future:
Sep 80 1/2 (80 19/32)


                   Copyright 1990 The Financial Times Limited

                             2622 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 20, 1990, Monday

Crisis in the Gulf;
Egypt seeks to strengthen Arab efforts against Iraq - Cairo plays host to stream
of envoys as intense diplomatic activity continues in attempt to avoid conflict



LENGTH: 426 words

EGYPT has become the hub of an Arab drive to maintain diplomatic pressure on
Iraq to withdraw from Kuwait, and thus avoid looming conflict.

Cairo played host, over the weekend, to a stream of Arab envoys, including
Prince Saud al-Faisal, the Saudi Arabian Foreign Minister, as efforts continued
to bolster an Egyptian-led Arab front against Iraq.

To this end, Egypt has called for a meeting of Arab foreign ministers to be held
in Cairo next weekend to implement the August 10 Arab League decision to send an
Arab deterrent force to Saudi Arabia.

Mr Chedli Klibi, the League's secretary general, was asked by the emergency Arab
summit to report within 15 days on how member states had complied with the
majority decision to send forces to Saudi Arabia. Egypt has sent up to 5,000
soldiers to Saudi Arabia, Morocco has sent 1,000 men and Syria has said it would
deploy an unspecified number. The US already has about 30,000 troops on the
ground in the kingdom.

Among many other envoys in Cairo yesterday was Mr Hani al-Hassan, a special
assistant to Mr Yassir Arafat, the Palestine Liberation Organisation Chairman.
Relations between Egypt and the PLO have been tense.

Dr Esmat Abdel Meguid, who received Mr Hassan, had earlier told a parliamentary
committee that Egypt distinguished between the Palestinian people and the
declaration of 'some of the Palestinian leaders inside and outside (the

Egypt's press, reflecting intense official displeasure with the PLO leadership,
has been sharply critical of Mr Arafat since the emergency summit. The PLO and
Libya joined Iraq in voting against the decision to respond to Saudi Arabia's
request for a deterrent force.

Mr Arafat, meanwhile, was reported to have put forward a fresh peace plan to
solve the crisis in Kuwait, based on a North African mediation effort. But
Morocco pointedly denied at the weekend that it was involved in any mediation.
Libya's Colonel Muammar Gadaffi has been advocating greater UN involvement in
the Gulf crisis. He charged at the weekend that the US, through its naval
blockade, was usurping the UN role.

'Only the UN Security Council has such power and implements it with UN forces
which come under the command of the UN Security Council and its military staff
committee,' he declared. 'Any other behaviour is considered a disgraceful
violation of the UN Charter and naked aggression.' However, a leading PLO
official declared yesterday that Iraq's occupation of Kuwait was illegal, the
first such direct criticism of Baghdad by a PLO leader.


                   Copyright 1990 The Financial Times Limited

                             2623 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 18, 1990, Saturday

Crisis in the Gulf;
Kuwait dithered as Iraq prepared to pounce



LENGTH: 1295 words

Notes taken at a cabinet meeting prior to the Iraqi invasion reveal confusion,
writes Victor Mallet

THE KUWAIT Government was fully aware of a military threat from Iraq two weeks
before the attack on August 2, but its ministers apparently failed to anticipate
a full-scale invasion or take the necessary military precautions.

Notes taken by a participant in a crucial cabinet meeting on July 18 - and seen
by the Financial Times - give a fascinating insight into Kuwait's confusion
about Iraqi motives and intentions.

They show that Kuwait had recently refused Iraqi demands for up to Dollars 10bn
(Pounds 5.26bn) in aid, had offered a paltry Dollars 500m over three years
instead, and had turned down Iraqi demands that billions of dollars of Kuwaiti
loans during the Gulf War be written off.

The cabinet met on July 18 to formulate a response to an Iraqi memorandum which
had demanded compensation for Dollars 2.4bn of oil 'stolen' from the Rumaila oil
field on the Kuwait-Iraq border.

Iraq had suddenly intensified pressure on its neighbour earlier that week,
prompting King Fahd, the Saudi leader, to offer mediation between Kuwait and
Iraq. Washington had meanwhile offered the first guarded indications that it
would support its Gulf allies against possible Iraqi aggression.

Many assumed that Iraq was simply stepping up pressure on Kuwait to ensure that
the Opec meeting, which ended in Geneva on July 27, raised the reference price
for oil and enforced production quotas previously flouted by Kuwait and the
United Arab Emirates.

The first speaker recorded in the notes is Sheikh Ali Khalifa al-Sabah, the
hard-working and energetic Finance Minister and former Oil Minister. He
suggested that Iraq was trying to salvage its economy and blame the Gulf states
for Iraqi economic failures. 'Iraq's tone will not change, even after Geneva.
Iraq is going to continue escalating the level of confrontation,' he predicted.

He proposed that a solution should be sought through the Gulf Co-Operation
Council, which embraces Kuwait, the UAE, Oman, Qatar, Saudi Arabia and Bahrain,
but excludes Iraq. Mr Badr al-Yacoub, the Minister of State for the National
Assembly, intervened to say that Iraq's objective was to extort money.

Sheikh Salem al-Sabah, the Interior Minister, then asked whether other Arab
states had supported Iraqi claims against Kuwait. He was the first to suggest
that Iraq may have profited from the political turmoil in Kuwait which preceded
the elections to the interim national assembly on June 10. (Kuwaiti
pro-democracy activists had been demonstrating for restoration of the parliament
suspended by Sheikh Jaber al-Ahmad al-Sabah, the Emir, in 1986, but the Emir had
only approved the interim assembly.) Sheikh Nawaf al-Sabah, the Defence
Minister, spoke next to deny the Iraqi accusations that Kuwait had violated the
countries' disputed common border. It was Iraq, not Kuwait, he said, which had
pushed its military installations and farm land across the frontier.

Mr Abdul-Rahman al-Awadi, the Minister of State for Cabinet Affairs, returned to
the view that Iraq was attempting to extort money. 'We must keep cool,' he said.
But he added 'the Iraqis are going too far,' and that Kuwait would need to move
very quickly to find a political solution to the crisis.

Sheikh Sabah al-Ahmad al-Sabah, the Foreign Minister who had been accused by
Iraq of being a US agent as the war of words between the countries escalated,
said the issue was an economic one. Nevertheless, the cabinet notes make clear
that he recognised the military danger. 'There is a possibility of Iraqi
aggression,' he says, adding that the border issue was explosive. 'We have to
start intensive diplomatic contacts with GCC countries.'

Sheikh Sabah suggested asking Abdullah Bishara, the head of the GCC, to contact
'our brothers in the GCC' and also proposes sounding out Egypt and Jordan. He
correctly predicted that Libya and Algeria might lean towards Iraq.

But Mr Dhari al-Othman, Minister of Justice, was equally concerned that Iraq,
freed from conflict with Iran by the 1988 cease-fire, would try to bypass Arab
mediation in its claims against Kuwait.

'The Iraqi memorandum is just the beginning. God knows how far they will go,' he
said. He rightly concluded that the oil price issue raised by Iraq is a pretext
for something else. Iraq and Kuwait were like a wolf and the lamb, he said.

Mr Habib Hayat, Communications Minister, then made reference to a map from a
French company showing that Iraq was planning to establish some sort of base on
the border. Mr Abdul-Wahab al-Fawzan, Health Minister, urged quick action by
Kuwait in response to the crisis.

Mr Fahd al-Hisawy, Minister of State for Municipal Affairs, echoed the view of
other ministers that Iraq may act before it talks and that Kuwait must be
prepared for a military threat. 'This is just the beginning,' he said.

Mr Salman al-Mutawa, Minister of Planning, was one of the few ministers at the
meeting who appeared to have misjudged the gravity of the situation. He said the
Iraqi memorandum was weak and easily answered. But Sheikh Saad al-Abdullah
al-Sabah, the Crown Prince and Prime Minister who fled to Saudi Arabia, took the
floor and raised the prospect of an attack. 'The Iraqis could take military
measures,' he said, but he predicted a limited operation to seize land in the
border areas of Ritqa and Qasr. He urged the Ministries of Defence and the
Interior to be on the alert.

Kuwait did proceed after the meeting to cancel military leave and raised the
state of alertness of its, in the end, ineffectual forces.

Sheikh Saad then launched into an analysis of the history of the border issue
since 1963. Iraq, he said, was demanding Bubiyan Island, which lies off Kuwait's
northern shore, and access to it by a bridge or causeway. Baghdad was also
claiming that the smaller Warbah Island was Iraqi territory.

Iraq, it seems, wanted to lease land (presumably Bubiyan) for its naval forces,
but this would have to be agreed by the GCC. The possibility of Kuwaiti
electricity supplies to Iraq and the provision of port facilities was also

At this point, the cabinet discussed Iraq's war debts to Kuwait and Saudi
Arabia. (Little information about the loans has been released, although they
have been estimated at about Dollars 35bn.) The notes are not clear about the
distinction between cash loans and the proceeds of oil sales from the
Kuwaiti-Saudi neutral zones, but they show that Kuwait gave aid of at least
Dollars 13.5bn to Iraq, including three tranches of Dollars 2bn each. Saudi
Arabia is said to have given Dollars 9bn (but this may be its cash contribution

At this point, one of the participants said that Kuwait should keep the loans on
its books, in spite of Iraq's insistence that they be written off. Responding to
the Iraqi allegations that Kuwait had stolen oil from the Rumaila field, one
cabinet member said that Kuwait had been producing 30,000 barrels a day from the
field, compared to Iraq's 400,000 b/d.

Sheikh Sabah then called for an urgent session of the National Assembly, for a
GCC meeting in Kuwait, for moves to get the Arab League to intervene, and for
preparation of the Kuwaiti memorandum, which appeared on July 19.

This week, Sheikh Sabah said in an interview in the al-Mussawar magazine in
Egypt, that Iraq's war debt to Kuwait lay between Dollars 14bn and Dollars 15bn.
He also said Kuwait had finally agreed at the August 1 mediation talks in Jeddah
to write off the debt and lease Warbah Island to Iraq as an oil outlet for the
Rumaila field.

'Iraq asked us to drop the debt and we did not object,' he said. 'Iraq asked for
Bubiyan Island. We agreed to give them Warbah Island instead.'

The day after Kuwait made these concessions Iraqi forces swept across the border
and began the conquest of Kuwait.


GRAPHIC: Illustration, no caption; Illustration, no caption; Illustration, no
caption; Picture, no caption; Picture, no caption; Picture, Sabah al-Ahmad
al-Sabah with the Emir (centre) andSheikh Ali Khalifa al-Sabah

                   Copyright 1990 The Financial Times Limited

                             2624 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 18, 1990, Saturday

Crisis in the Gulf;
Seven arrested in Iraq poison gas swoop



LENGTH: 409 words

WEST German customs officials have arrested seven people on suspicion of
furnishing Iraq with equipment to make poison gas in a swoop which is bound to
embarrass Bonn.

It came as the Government said yesterday that it was supplying equipment to the
US to help combat possible use of chemical weapons by Iraq in the Gulf conflict.
This underlines Germany's expertise in chemical warfare defence.

The suspects were detained with warrants linked to the investigation of
companies in Hamburg, Hanover and the state of Hesse, the public prosecutor's
office in Darmstadt said. Those arrested are alleged to be working on supplying
Iraq with equipment for making mustard gas and the nerve gas tabun.

The raid potentially adds substance to reports about the close links between
West German companies and the Iraq military effort in chemical weapons. Two
months ago, Jurgen Hippenstiel-Imhause, the former head of the chemical company
Imhause, was jailed for five years for supplying Libya with equipment to make
nerve gas at its Rabta plant near Tripoli.

The government equipment deal confirms Bonn's desire to give military support to
the US over the Middle East crisis in spite of the lack of clarity over whether
German minesweepers will be deployed in the Gulf. A Defence Ministry spokesman
also said that Bonn had agreed to furnish the US army with 10 armoured sensor
vehicles designed to test for contamination with poison gas.

The 'Fuchs' (fox) armoured cars are designed to be used by the army 'in
connection with the possible threat to American soldiers through chemical
weapons in the Gulf region,' the ministry said.

The US has been consulting experts on chemical warfare, both in the US and
overseas, to discuss antidotes to attacks.

While the Pentagon has been insisting that US forces are well-equipped and
trained against poison gases, there has been a rush of orders to manufacturers
of protective clothing as well as carefully staged demonstrations of the use of
the equipment in the desert.

The US Army warned Congress last year of 'critical' shortages of gas detection
devices and decontamination equipment. The latest protective tents with airlocks
have been ordered, but are not yet available.

Each US soldier has a 7lb kit including a hermetically sealed face mask with
filter cartridges and a two-piece suit of cotton-nylon and charcoal-impregnated
polyurethane. But the outfits have to be replaced every 10 to 24 hours.


                   Copyright 1990 The Financial Times Limited

                             2625 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 17, 1990, Friday

Gulf's banks bear the brunt



LENGTH: 1878 words

David Lascelles says shock waves are rippling through Middle East financial

Turmoil is the only word to describe the state into which the Middle East crisis
has plunged the banking industry of the Gulf. Most Kuwaiti banks have ceased to
function effectively, and the tremors are spreading to neighbouring states like
Bahrain. Many European, Japanese and American banks are withdrawing personnel
and cutting credit lines. Apart from the dislocation caused by the conflict
itself, the freeze imposed on Kuwaiti and Iraqi assets by western countries is
adding to the chaos.

Although it is too early to measure the full cost, it is clear that even if the
stand-off were to end tomorrow with the retreat of Iraq, it would take a long
time to repair the damage and restore confidence in the region. It has also set
back the ambitions of Kuwaiti financial institutions to expand internationally.

'It is hard to say this, but a quick sharp war would be more desirable from a
banking point of view than a long drawn-out one,' said one Gulf banker this

Unlike earlier Middle East crises, the direct financial implications of this one
are large and measurable because of the enormous wealth accumulated along the
oil-rich Gulf coast. Until a fortnight ago, Kuwait had one of the most highly
developed banking industries in the Arab world with assets in excess of Dollars
50bn. Its leading bank, National Bank of Kuwait with assets of Dollars 13bn,
ranked number five in the Arab banking league. A large portion of those assets
are now under Iraqi control or frozen, where their future depends upon how the
current tense political situation is resolved.

For once, worries about western exposure to a tense area are less prominent. Few
Gulf countries, including Kuwait and Saudi Arabia, allow foreign banks to open
offices of their own on their territory, and the decline in oil surpluses in
recent years had led to a steady exodus by western banks from countries that
did, mainly Bahrain.

The largest direct western banking interests on the Arabian peninsula are
Citicorp's 40 per cent stake in the Riyadh-based Saudi American Bank, and Morgan
Guaranty's joint venture with the Saudi Arabian Monetary Authority, Saudi
International Bank in London. Both banks said they were operating normally this
week, though keeping a close watch on events.

There is also relatively little western loan exposure. Indeed, Kuwait's great
oil wealth makes it a net creditor of the international banking system.
According to the latest figures from the Bank for International Settlements this
week, western banks owe Dollars 8bn to Kuwait, but had more than twice that -
Dollars 17.6bn - in Kuwaiti deposits.

Western banks' loans to Iraq - of which half are officially guaranteed trade
credits - amount to Dollars 8.4bn. Iraq's deposits are Dollars 3.3bn, leaving a
net exposure of Dollars 5.1bn. A large proportion of this is accounted for by
one bank, the Italian Banca Nazionale del Lavoro whose Atlanta office made
Dollars 2.8bn of unauthorised loans last year and is now being investigated in a
much-publicised fraud case. Most western banks had already provided heavily
against their Iraq exposure because of the country's deteriorating debt record.
The UK is actually a net borrower from Iraq.

If the Gulf crisis deepens, banks which have both loans and deposits with Iraq
and Kuwait could begin to net out their exposure by setting one against the
other. But this is tricky legal territory, and banks would embark on it with
caution. Kuwaiti and Iraqi deposits are, in any case, now frozen both as a
punitive measure against Iraq and to protect Kuwaiti assets.

The situation is much more critical for Kuwaiti banks, some of which will not
survive a drawn-out confrontation or possible war.

The immediate effect of the invasion was to bring the domestic Kuwaiti payments
system grinding to a halt, forcing the closure of the banking industry and the
Kuwaiti dinar market. The subsequent reported plundering of the Kuwaiti Central
Bank by Iraqi troops meant that locally held reserves (which are only a tiny
proportion of Kuwaiti's total wealth) have gone, as has Kuwait's store of
unissued bank notes.

The central bank governor, Sheikh Salem Abdul-Aziz al-Sabah, managed, like many
members of the ruling family, to escape the invasion, and is now in London where
he is trying to organise Kuwait's exiled financiers and bankers, and bring some
order to his country's disrupted financial affairs.

Fortunately for the National Bank of Kuwait, virtually all its management and
main board directors managed to escape too, or were abroad on summer holiday at
the time. They have regrouped in London, where NBK is the only Kuwaiti bank with
a fully-fledged branch, and where it has enough records to keep going. The
directors have even held a board meeting in the City.

Although NBK, in common with all banks, cannot pay out Kuwaiti-controlled assets
without the permission of the Bank of England, it is believed to have been given
some operating leeway by the Bank. It has also avoided being officially
'blocked' by the US Treasury because it is not owned or controlled by any Kuwait
government entity.

The United Bank of Kuwait, a joint venture by 13 Kuwaiti financial institutions,
is still in operation too, thanks to the fact that it is a UK bank registered in
London. But most other Kuwaiti financial institutions are hamstrung, either
because they are blocked due to the extent of Kuwaiti government control over
their affairs, or because they were 'trapped' in Kuwait by the invasion.

Whether, and in what shape, these banks survive will depend on the course of the
conflict. Among the factors in their favour is the fact that so many of them had
substantial assets outside Kuwait. And although the freeze on deposits is
causing them a massive headache, it does at least limit the scope for a run on
deposits. At the moment, these banks are only allowed to pay out small amounts
to meet the living expenses of the estimated 40,000 Kuwaitis who have taken
refuge in London.

The question is what happens if there is no satisfactory and quick end to the
crisis. There will be a steady attrition of deposits, and if the freeze is
relaxed for whatever reason, the outflow could be large.

Mr Christopher Keen, general manager of the United Bank of Kuwait, said his bank
expects to lose about one third of its deposits over the coming weeks. 'But we
can handle that,' he said, 'because we have always been a fairly liquid bank and
we'll be able to scale down our balance sheet.'

At least Kuwait has sufficient external assets to be able to support its banks,
provided it can organise some kind of administration. 'Is there such as thing as
Kuwait Inc.?' asked a US banker. 'If they got their act together they could form
a government in exile with huge reserves.'

But the shock of the invasion has obviously not been limited to the relatively
narrow confines of Kuwait itself. The wider impact has hit banks particularly in
neighbouring Bahrain, the Gulf's main offshore banking centre, which has seen a
large outflow of funds and banking personnel.

The banks there hope to sweat it out, but bankers admit that the shock to
confidence has been severe. The most exposed is Arab Banking Corporation, the
largest bank in the Arab world with nearly Dollars 22bn in assets, and one of
its most international. ABC is 25 per cent owned by the Kuwaiti Ministry of
Finance, which means it has been included on the US Treasury's list of banks
being considered for blocking.

All this week, Mr Abdulla Saudi, the bank's president and chief executive, has
been in Washington trying to persuade US officials that the level of Kuwaiti
influence is insufficient to warrant a step which would severely damage his
bank. The deadline for the decision is tomorrow. Apart from its size, any
difficulty at ABC would have wide ripple effects because of the extent of its
international operations. Ironically, the bank made a Dollars 325m international
rights issue only three months ago and was in the process of obtaining a listing
on several foreign stock exchanges. ABC is also the dominant shareholder in
Banco Atlantico, Spain's ninth-largest bank with 256 branches.

Like UBK, ABC is a conservatively managed, liquid bank which could withstand a
big withdrawal of deposits. But it seems highly likely that it, too, will have
to shrink its business to absorb the shock of events. The fact that ABC's main
shareholders are the governments of Kuwait, Libya and Abu Dhabi has made for an
interesting political mix, and ABC only narrowly missed being blocked at the
time of the last big Middle East crisis when the US bombed Libya..

The Kuwait Government also has a stake in another large Bahrain bank, Gulf
International. But the involvement is much smaller - only one seventh - and GIB
has not been blocked by the US Treasury, even though the Iraqi Government also
has a one-seventh stake.

Quite how far the tremors will extend depends on how many countries get sucked
into a possible war. If King Hussein's current trip to the US fails to resolve
Jordan's ambivalent position in the conflict, another potential casualty would
be the Amman-based Arab Bank in which the Kuwait Ministry of Finance is believed
to hold 10 per cent. However, Arab Bank is one of the great survivors of the
Middle East, having come through countless nationalisations and political

Mr Robin Monro-Davies, managing director of IBCA, the London-based bank rating
agency, said it is inevitable that Gulf banks will suffer a heavy outflow of
deposits. 'Common sense says they will have great difficulty maintaining their
non-blocked deposit base,' he commented. Although this need not imply crashes or
panics because banks could wind down their books in an orderly way, he
warned:'Things always turn out worse than people expect.'

The longer-term questions centre on the attitude of western bankers to the Gulf.
Is this the final straw which breaks the back of their already waning
confidence? Or is the international banking community more resilient than that?

The immediate reaction has certainly been sharp. Many banks have cut their
credit lines to the region, in particular the Japanese who are reported to have
mounted a wholesale retreat. 'The international banking community was caught
flat-footed in Kuwait, and they're making bloody sure they're not going to get
caught somewhere else,' said one Middle East banker.

Banks without any strong ties to the Middle East will almost certainly not come
back. They lack the connections to generate enough business to compensate for
the risks. Iraq's belligerence inevitably raises questions about the durability
of the Gulf's other small sheikhdoms, and that makes bankers nervous.

But others argue that the economic fundamentals of the Gulf will change little
whatever the outcome of the conflict. The world still needs oil, so it will
continue to be pumped, generating cash which will have to be channelled into the
world's big financial markets. So there will always be large-scale opportunities
for banks which have learned to handle the Middle East. 'Banks without links to
the region may shun it. But I doubt that we shall; there's too much good
business to be had,' said the representative of a large US bank.


GRAPHIC: Table, no caption; Picture, Sheikh Salem Abdul-Aziz al-Sabah

                   Copyright 1990 The Financial Times Limited

                             2626 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 16, 1990, Thursday

Crisis in the Gulf;
US charges two with planning to export arms



LENGTH: 319 words

A GERMAN and Spaniard were charged in the US yesterday with trying to export
arms to Iraq, including anti-tank missiles and artillery shells to carry toxic

Possible Iraqi use of chemical weapons is of concern to the US, whose military
build-up continues in the Middle East. In recent years Iraq has used them with
deadly effect against Iranians and Kurds.

US Customs Service agents arrested Mr Claus Fuhler, a German living in Spain,
and Mr Juan Martin Peche-Koesters, a Spaniard, in Orlando, Florida, on Monday.
They were indicted yesterday.

Tipped off by a 'business source', undercover agents claim they had held a
series of conversations with the two men and exchanged numerous letters and
messages since late last year. The Orlando meeting was to finalise the purchase
of 10,000 TOW anti-tank missiles and 20,000 artillery shells.

Half the shells the men requested were to have a range of up to 17 miles and be
capable of releasing deadly chemicals, the Customs Service alleges.

In previous meetings the two men had also talked about buying rifles, mortars,
demolition charges, grenades and vehicles mounted with 106mm artillery pieces.

The men were planning to ship the arms to Iraq, Iran and Libya through Spain
using bills of landing and invoices describing the weapons as drilling
equipment, machinery and motors, according to the Customs Service.

In 1989 alone the service's efforts to catch illegal arms exports resulted in
the arrest of 156 people, convictions of 104 and the seizure of 1,424 items of
equipment worth Dollars 105m (Pounds 56.7m).

Iraqi deployment of chemical weapons in the Saudi oil fields near the Kuwait
border would severely hamper military operations and oil production for a long
period while effects of the poisons wore off.

According to US military estimates Iraq has several chemical weapons plants
capable of making some 1,000 tons of poisons a year.


                   Copyright 1990 The Financial Times Limited

                             2627 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 15, 1990, Wednesday

Ailing eastern Europe sails into an oil slick


SECTION: SECTION I; European News; Pg. 4

LENGTH: 1144 words

Gulf crisis deals blow to economies of the emerging democracies, writes Judy

THE GULF crisis has dealt the ailing economies of eastern Europe a second blow
to their reform plans. Just as they have begun to adjust to the Soviet Union's
decision to cut its oil supplies to them and to charge the dollar market price
from January, the cost of alternative supplies on the open market has been sent
leaping upward.

On top of that, as a result of the United Nations trade embargo they will suffer
a reduction in the trade some of them have built up with Kuwait and Saudi
Arabia, the bulk of which is done through Kuwait. They will also have to get
used to the fact that they might not recoup their loans to Iraq. It is a grim

Hungary provides a poignant example in a region where energy policy has been
tied to cheap Soviet oil and the massive pipeline and refinery infrastructure
that went with it. This dependence, coupled with President Mikhail Gorbachev's
growing economic and political problems, provided the Hungarian authorities with
the catalyst to restructure the country's oil and energy industry.

It amounted to a radical proposal aimed at forming a unique trade relationship
between Hungary and Kuwait based on oil. The gist of it first took root in the
late 1980s when Hungary became the first Warsaw Pact country to establish
diplomatic relations with Kuwait at a time when, along with Saudi Arabia, it was
shunned by the Soviet Union and eastern Europe.

Hungary, as much as Czechoslovakia, Poland and Bulgaria, suffered from the oil
crisis during the 1970s and cuts in Soviet supplies in the mid-1980s. It was not
prepared to be caught out again.

Over the past two years, the Socialist (former Communist) Party set up joint
ventures with several multinational oil companies in the retail sector partly
designed to cope with the rapidly expanding tourist industry.

Following these successful ventures, several delegations from the Middle East,
in particular Kuwait, were interested in setting up their own petrol retail
outlets in Hungary. Kuwait was especially keen on selling Q 8, its own petrol

But the Hungarians had their sights on the long term. With the aim of seeking
alternative energy supplies, it raised the possibility of having Kuwait
construct oil refineries suitable for processing the heavy crude from the Middle
east. (The oil refineries in eastern Europe cater only for the Soviet Union's
crude which is lighter than Middle East oil.)

Such a contract would have significantly reduced Hungary's dependence on the
Soviet Union. In addition, Hungary would have provided Kuwait with a convenient
outlet for marketing its oil in Europe.

The Gulf crisis has temporarily scotched that plan.

'We are still very interested in talking with other Middle East countries,'
explained Mr Gabor Jozsef, the deputy general manager of the Hungarian National
Oil and Gas Trust.

In the meantime, Hungary and the other countries in eastern Europe, have had to
cope by raising petrol prices and by buying oil on the open market.

The Soviet Union reduced its oil supplies to Hungary by 30 per cent or 500,000
tonnes of oil for the third quarter of this year. There was also a shortfall in
deliveries of 440,000 for the first half of the year.

Last February, Hungary received 210,000 tonnes from Iraq partly in lieu of an
outstanding Dollars 32.5m loan to Iraq. Hungarian officials say they cannot
expect to recoup the remaining Dollars 16.5m in goods or cash.

Furthermore, Hungary's trade with the Middle East, of which most was channeled
through Kuwait might be affected. In 1988, exports to Saudi Arabia totalled
Dollars 47m and increased by nearly 50 per cent the following year.

Poland, whose supplies from the Soviet Union were also reduced by 30 per cent,
will have to import 1m tonnes (on the open market) to compensate for the Soviet
and Middle east shortfall.

It is owed Dollars 500m by Iraq for goods supplied to the Iraqi army. It
recently received 250m tonnes of oil in lieu of these outstanding loans and had
arranged to receive 750m tonnes this year which is unlikely now to be realised.
Poland, which has six weeks' worth of production reserves in its refineries, is
holding talks with Nigeria.

Its trade with the Middle East will also be undermined. Before the Iran-Iraq
war, Polish exports to Iraq totalled Dollars 80m. They plummeted to Dollars 1m
during the war. Poland had hoped this year to increase its exports by Dollars

Czechoslovakia is in no better shape. Soviet energy supplies were cut by 409,000
tonnes a month from the original contract of 1.3m tonnes. It too has little hope
of recouping, in the form of oil, its a Dollars 300m loan to Iraq.

Bulgaria, which is owed Dollars 1.2bn by Iraq and whose energy supplies from the
Soviet Union were also cut last month, is hoping it can receive oil from Libya,
Algeria and Nigeria in lieu of outstanding loans to those countries which
together total Dollars 502m.

The governments of these countries are seeking two ways out of the crisis.
First, they hope that the Soviet Union will make short-term contracts to make up
for the shortfall.

But this is hardly a solution. The price of oil has sharply risen; trade between
eastern Europe and the Soviet Union will be conducted on a dollar clearing
system from next January; and all these countries are strapped for cash.

Mr Joszef Antall, the Hungarian Prime Minister, on a visit to Brussels last
month, spelled out the costs of Soviet oil cuts. He said Hungary was facing
extra expenditure of about Dollars 60m on oil.

In turn, Gazeta Wyborcza, the Polish Solidarity daily, suggested that Poland ask
the 'richest advocates of the blockade of Iraq, particularly the US' to
compensate for part of the losses.

So far, pleas by the emerging democracies in eastern Europe have gone unheeded
in the west. The long hot summer could be followed by a cold and bitter winter.

                         EASTERN EUROPE
     Oil imports as percentage of hard currency exports at
                      per-barrel prices (%)
                      Dollars 10      Dollars 20      Dollars 30
Bulgaria                  40              80              120
Czechoslovakia            30              60               90
East Germany              22              44               66
Hungary                    7              14               21
Poland                    11              22               33
Romania                    4               8               12
Yugoslavia                 5              10               15
Source: Morgan

Heady cocktail of capitalism, Page 14

Heady cocktail of capitalism, Page 14


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                   Copyright 1990 The Financial Times Limited

                             2628 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 14, 1990, Tuesday

Scargill calls on miners in fight against 'vicious media attack'

BYLINE: Our Labour Correspondent

SECTION: SECTION I; UK News - Employment; Pg. 9

LENGTH: 387 words

MR ARTHUR Scargill, National Union of Mineworkers president, yesterday called on
Britain's miners to support him and Mr Peter Heathfield, union secretary, in
'our fight against the most vicious media attack on individuals in living

His plea came in his 24-page 'Response to the Lightman Inquiry' which has been
published to defend the two men's handling of finances during the 1984-85 pits
strike amid a series of miners' meetings around the country to discuss the

Mr Scargill said in his report that he could see no difficulty in funds
collected in the Soviet Union being transferred to the NUM 'if the Soviet
Miners' Union, even at this late stage, tells us that its intention was to send
monies specifically for the NUM.'

However, the Soviet miners made it clear they would only put money into an
international account for miners anywhere in the world.

On Libya, Mr Scargill said that he was not seeking financial support from the
country when he agreed that Mr Roger Windsor, former NUM chief executive, should
visit the north African state during the strike.

He had made clear in a radio interview in 1984 that the union would welcome
financial assistance from trade unionists anywhere. Although Mr Scargill did not
say so in the report, he said yesterday that he was not aware of any money
coming from Libya.

Mr Scargill rebuts criticism in the Lightman report that he did not receive
permission from the NUM executive before taking a bridging loan from the MTUI, a
section of the Communist-controlled World Federation of Trade Unions, to help
buy a house. 'I do not accept it is a breach of duty not to report a personal
loan obtained from an organisation other than the NUM.'

The loan transacted months after the end of the strike had been fully repaid.

Mr Scargill said he had never intended to disclose to the NUM executive the
accounts which helped sustain the union, pay creditors and repay trade union
loans during 1984-89. One reason was that if the accounts had been made known
the loans would not be repayable as a matter of law by the NUM.

There was no money missing and all creditors had been repaid. 'Our crime is that
we . . . are guilty of doing all in our power to nullify the actions of the
establishment and the courts which were hell-bent on destroying our union.'


                   Copyright 1990 The Financial Times Limited

                             2629 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 14, 1990, Tuesday

NUM team may rule on Soviet cash by next week

BYLINE: MICHAEL SMITH, Labour Correspondent

SECTION: SECTION I; UK News - Employment; Pg. 9

LENGTH: 463 words

LEADERS OF the National Union of Mineworkers hope to be able to reach
conclusions by early next week about the ownership of Soviet money donated
during the 1984-85 UK pits strike.

Members of the four-man team investigating the union's finances will be
deliberating after visits this week to Paris, where they plan to examine the
books of the International Miners' Organisation, and to Moscow, where they will
meet union leaders.

Mr Gordon Butler and Mr Henry Richardson, two of the four executive members,
said yesterday they expected to make just one trip to Paris for their
investigations and that would start on Thursday.

They plan to go on immediately to Moscow, probably on Friday, to meet present
and past leaders of the official Soviet miners' union to examine conflicting
claims about the intended destination of Pounds 1.4m collected by Soviet miners
during the pits strike.

There are, however, no plans to go to Libya following claims in the Sunday Times
last week that Colonel Gadaffi had confirmed that the NUM had accepted donations
from his country.

A report by Mr Gavin Lightman, QC, into the union's finances during the strike
concluded that Pounds 150,000 might have been received by the NUM from Libya. It
also suggested that the NUM should take legal action to recover Pounds 1.4m plus
interest which is being held by the IMO but might have been intended for the

In a 24-page document, called Response to the Lightman Inquiry, Mr Scargill has
repeated his assertion that no money was sought from Libya during the dispute
and that the Soviet money was intended for coal workers worldwide rather than
British miners.

Mr Scargill indicated yesterday that he would not be seeking NUM money to sue
the Daily Mirror and the Cook Report over allegations that he and Mr Peter
Heathfield, union secretary, used money donated during the strike for their own
purposes. Mr Butler has suggested that money should be made available for a
libel suit.

Mr Scargill said, however, the Lightman report had cleared him and Mr Heathfield
of the charge and that it would be crazy to use members' money for a trial when
press vilification would make a fair hearing difficult.

Mr Richardson said yesterday that he and the other three members of the four-man
executive team hoped to have enough information by early next week to start
compiling their recommendations for consideration by the national executive
committee next month.

A one-day special conference of NUM delegates would probably follow.

Mr Richardson said this week's discussions 'may show that the (IMO) money does
not belong to us.'

Mr Butler said he hoped it could be cleared up this week whether the Soviet
money was intended for the NUM. 'Much will depend on what the Soviet unions


                   Copyright 1990 The Financial Times Limited

                             2630 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 13, 1990, Monday

Between reform and more decline



LENGTH: 1965 words

The rules of foreign patronage in Africa are changing at a time of great
instability there, writes Michael Holman

Liberia's slide from dictatorship to anarchy is terrible, even by the standards
of a continent used to upheaval. But far from being an aberration, Liberia could
prove to be just the first of several states to collapse under the weight of
economic mismanagement and ethnic tensions, compounded by policy failures on the
part of the superpowers and aid donors.

Other wars in sub-Saharan Africa highlight the continent's fragility: Angola,
Mozambique, Sudan, Somalia and Ethiopia are torn by conflict. Uganda has yet to
recover from Idi Amin. Chad and Libya may again come to blows. Senegal and
Mauritania keep an uneasy peace.

Almost wherever one looks, from Angola to Zambia, from Mali to Mozambique, the
ossified political structures of post-independence Africa are cracking. From
across the continent come calls - endorsed by western governments, aid donors
and lending institutions - for a multi-party system. Political adjustment is
catching up with the economic adjustment programmes being introduced. But the
cry for democracy is as much a moan of pain caused by the economic failures over
three decades of independence, and Africa is delicately poised between reform
and further decline.

'Good governance' - the World Bank's term for better management and democracy -
is essential to recovery from disaster. But it will not be the engine of growth
for a debilitated continent.

The causes of the upheaval are complex. The most frequent explanation invariably
couples the renewed search for freedom in Africa with the revolution in eastern

'The wind blowing from Europe has begun to sweep Africa. We should not moan over
it, we should even rejoice over it,' as President Mitterrand put it in a recent

France, like Britain and the US, is encouraging the process by linking aid to
democracy. 'France will link its contributions to efforts designed to lead to
greater . . . democracy,' Mr Mitterrand told African leaders at the francophone
summit last June.

Even the Organisation of African Unity, that club of autocrats so tolerant of
each others failings, last month conceded that it was necessary 'to democratise
further our societies and consolidate democratic institutions.'

But there are more important influences than eastern Europe that are driving
Africans to the barricades.

France is reappraising its relationship with francophone Africa. The superpower
rapprochement has reverberations in southern Africa and the Horn of Africa in
particular, as well as leaving several African leaders anxious about their
dwindling foreign patronage.

Aid-dependent regimes have become uneasy as the World Bank and increasing
numbers of western governments have moved towards demanding political reform as
a condition of aid. South Africa's search for a constitution which accommodates
the aspirations of the majority, while coping with the fears of minorities, is
gripping the attention of the rest of Africa. Above all, a decade or more of
sharp economic decline has made impoverished citizens throughout the continent
angry with their rulers, and impatient to find leaders with alternatives.

Certainly, eastern Europe's revolution encouraged opposition movements. It
further undermined belief in centrally controlled economic systems - though the
examples of Tanzania and Zambia had already done that. And as regimes in East
Germany and elsewhere collapsed, the governments in Angola, Mozambique and
Ethiopia lost reliable allies.

(South Africa is sui generis. Government officials there acknowledge a two-fold
impact which proved decisive in persuading President F.W. de Klerk to embark on
radical change. The spectacle of mass demonstrations against elitist governments
evoked the worst white South African nightmare. And the collapse of communism as
an ideology encouraged Pretoria in the belief that it was safe to unban the
South African Communist Party).

But there are critical differences between the experience of eastern Europe and
the process under way in Africa which limits the appropriateness of any
comparison. The former has an industrial proletariat with considerably more
muscle than that of the peasants in Africa's predominantly agricultural
economies. Essential to the success of the eastern European revolution was the
fact that the region's metropolitan power - the Soviet Union - was preoccupied
by its own domestic crisis, and made clear it would not intervene.

For Africa, this process took place two to three decades ago, when Belgium,
France, Britain and Portugal decided that the price of the colonial relationship
was too high.

Post-independence Africa then enjoyed a brief period of democracy, before voters
discovered that the district commissioner had been replaced by the party
apparatchik, and the parastatal bureaucrat. The latter are proving far more
difficult to dislodge.

Alone among the colonising powers, France has kept up a willingness to intervene
militarily and financially if a former colonial protege is in trouble. This
willingness may now be in doubt, a factor that will prove far more significant
to political change in francophone Africa than anything that happened in eastern

Although France retains an extraordinary historical and cultural link with
Africa, it is finding the financial responsibilities of underwriting the CFA
franc increasingly onerous.

The CFA Franc, the common currency used by France's 13 former colonies, has been
pegged to the French franc at a rate of 50 to one since 1948. It proved of
mutual benefit for a while; but is now becoming a financial burden which is
pushing France into a reassessment of its African ties.

France is also giving notice that its military involvement in Africa may be more
limited than in the past. Mr Mitterrand again:'Our role . . . is not to
intervene in your internal conflicts. In that case France, in agreement with
(African) leaders, will watch over the protection of its citizens; but it does
not intend to arbitrate the conflicts.' The prospect of losing the military
umbrella - some 9,000 French troops are based in francophone Africa - is as
disconcerting to current leaders as it is encouraging to their opponents.

The impact of the superpower rapprochement is still being felt. The obvious
benefit has been Namibia's independence, and the boost given to the peace
process in South Africa.

As Namibia begins independence with a multi-party constitution, and the world
demands the same from South Africa, opposition leaders in the region are
asking:Why not us?

But detente has implications beyond southern Africa.

Aid and security has long been linked. As Africa ceases to provide cockpits for
superpower conflicts by proxy, so aid to certain countries will decline. It has
already in Somalia. Leaders of countries such as Zaire, who adroitly played on
tensions between Washington and Moscow to bid up aid levels, are now getting
less support, while their opponents receive a sympathetic hearing.

The rapprochment has also left a potentially dangerous power vacuum. In the
Horn, this could well be filled by Israel - which is almost certainly supplying
arms to Ethiopia's president, Mengistu Haile Mariam - or one or more of the Arab
states. This would exacerbate, rather than resolve the conflicts.

Last November, the World Bank added another element to the pressure on African
governments. In the most searching examination of Africa's problems ever
published by the Bank, the continent's largest donor called on leaders to become
'more accountable to their peoples.'

'Many governments are wracked by corruption and are increasingly unable to
command the confidence of the population,' said the Bank, warning that without
democratic reforms, many countries structural adjustment programmes will fail
and external aid will fall.

Most African governments are resigned to the prospect that in future, aid will
have political as well as economic conditions attached. Neither the Bank nor
governments such as the US and Britain which have endorsed this approach, have
so far drawn up formal political criteria.

But on such a list would be issues ranging from the state of the local press to
whether a recipient is a one- or multi-party state.

One of the first countries to face such a test has been Kenya, where opposition
leaders have been detained and President Daniel arap Moi has entrenched the
authoritarian ruling party. During last month's unrest, Washington made clear
that aid flows could be reduced if reforms did not take place. Britain issued a
similar message, sotto voce.

Whatever the roots of the African unrest, one thing is clear. Despite World Bank
supported economic reform programmes adopted in varying degree by about
two-thirds of sub-Saharan Africa, the continent remains in deep economic crisis.

The Bank's report on Africa pointed out that the region's economies must grow by
at least 4 per cent to 5 per cent annually for a 'modest' improvement in living
standards. This target requires a 4 per cent a year increase in real terms of
official development assistance, together with further external debt relief. It
represents a gross Overseas Development Agency requirement of Dollars 22bn a
year at 1990 prices by 2000, the Bank estimates.

Many economists believe this underestimates Africa's needs; but even this
comparatively cautious goal may be hard to attain.

Donor fatigue has set in since the 1980s, when the high point of compassion was
Band Aid in 1984. Nor are aid flows helped by the spectacle of the World Bank
and the Economic Commission for Africa, the UN body that acts as the continent's
think tank, quarrelling over the type of medicine the patient needs.

There are growing doubts that the Bank's 'model patients' are, in fact, going to
recover. After seven years of external assistance running at an annual rate of
about Dollars 500m, Ghana, for example, is still a long way from passing the key
test:can growth be sustained without substantial aid?

And even if the patient pulls through, will there be sufficient external support
for the 40 or more sub-Saharan countries that need varying degrees of help? It
seems unlikely. Private investment is negligible, and the aid needs of eastern
Europe overshadow Africa's. Meanwhile, the voice of the Africa lobby carries
less and less weight.

Africa now beckons neither high-flying diplomat nor thrusting businessman.
Pretoria and perhaps Lagos rate highly. But the biggest career lure comes from
Asia, Europe, and the US. Businessmen note that Africa's share of world trade
has fallen in the past 30 years from 3 per cent to 2.5 per cent. They say that
investing in south Asia costs roughly half as much as investing in Africa, and
produces many times the return.

Africa, almost as impoverished today as it was 30 years ago, but now burdened by
a Dollars 135bn external debt that equals the continent's GNP, will probably get

More will feel the pain as the years go by. Africa's population is expected to
double to about 1bn over the next 20 years, unless fertility rates drop - or
AIDS wreaks the havoc that some observers fear.

Africa's marginalisation is not just its own affair. In an interdependent world,
all places are vulnerable to each other's misfortunes.

African deforestation may contribute to global warming; plants which could
provide important genetic material for crop or medical research may be lost;
diseases such as AIDS know no boundaries; Muslim extremism in Africa, a
potentially destabilising issue in Nigeria, could pose a new terrorist threat.

These may seem to be problems that can be addressed in the fullness of time. But
the 'multi-party' signals from Africa should be treated with caution:the
continent may not be waving, but drowning, with more than Liberia soon to go


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                   Copyright 1990 The Financial Times Limited

                             2631 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 11, 1990, Saturday

Crisis in the Gulf;
Abu Nidal may launch attacks on US targets


SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 499 words

Financial Times writers assess the outlook after a week of acute tension across
the Gulf

WESTERN governments are expressing concern that Iraq may have given the go-ahead
for a spate of Palestinian terror attacks on US targets in order to bolster its
position in the Gulf confrontation.

Press reports in the Arab world suggest that Abu Nidal, leader of the extremist
Fatah Revolutionary Council (FRC), is shifting his headquarters back to Baghdad
from the Libyan capital Tripoli.

The FRC was last year described by the US Defence Department as 'the most
dangerous terrorist organisation in existence.' Iraqi newspapers this week also
carried the text of a statement from Mohammed Zaidan, leader of a splinter
faction of the Palestine Liberation Organisation known as the Palestine
Liberation Front, threatening to attack US interests as a result of the US
military build-up in the Gulf. 'We will strike at American and imperialist
interests immediately any foreign soldier sets foot on Arab territory,' the
statement said.

Zaidan, otherwise known by his nom de guerre Abul Abbas, has long been an Iraqi
client, and a thorn in the side of the more pragmatic PLO mainstream led by
Yassir Arafat.

He masterminded the bloody hijacking of the Achille Lauro cruise liner in the
Mediterranean in October 1985, and was responsible for the abortive raid on a
beach near Tel Aviv in late May of this year - an action which Mr Arafat
declined to condemn, prompting an outraged Washington to suspend dialogue with
the PLO.

Iraq's moves to identify itself publicly with Palestinian terror operations are
not the smallest irony of the current Gulf crisis, since little more than a year
ago the US State Department was crediting both Syria and Iraq with a substantial
reduction in their direct involvement in terrorism. The distance Iraq put
between itself and terror groups such as the FRC during the Gulf war was one
reason why Washington was able to restore diplomatic relations with Baghdad in

However Iraq's latest move will make life even more difficult for Mr Arafat as
he pursues his perennial political balancing act between Arab powers. Sensing
Iraq's growing assertiveness in the Middle East in recent months, he has already
hitched his fortunes to those of President Saddam Hussein, to a point where any
thought of the PLO's joining American-sponsored negotiations to resolve the
Palestinian-Israeli conflict has been virtually snuffed out.

If confirmed, the reported move by Abu Nidal's FRC to Baghdad would be just as
significant. It was in Baghdad that Abu Nidal, whose real name is Sabri
al-Banna, broke away from Mr Arafat's group in the early 1970s and embarked on a
series of bloodthirsty terrorist attacks estimated to have resulted in the
killing or wounding of 900 people in 20 countries since 1974.

The FRC, based for several years in Libya, has recently been convulsed by
internecine strife, and there have been persistent reports suggesting that
al-Banna is either dead or seriously ill. A move to Baghdad might well give him
a new lease of life.


GRAPHIC: Illustration, no caption

                   Copyright 1990 The Financial Times Limited

                             2632 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 11, 1990, Saturday

Arab states confront Iraq;
Saddam calls for 'holy war' against US forces Bush warns of blockade


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 1172 words

ARAB leaders voted in Cairo last night to join a multinational military effort
to confront Iraq as President Saddam Hussein raised the stakes in the Gulf
crisis by calling for an Arab 'holy war' against US forces in Saudi Arabia.

The Arab League decision - a step which would have been almost unthinkable only
last week - and the Iraqi leader's furious broadside against the US and its Arab
allies threatened a further deterioration in what is already the Middle East's
worst crisis in more than two decades.

In effect, a majority of Arab leaders appear to have agreed to join the US in
seeking to force Iraq's withdrawal from Kuwait. The result could be an all-out
clash between Baghdad and many of its Arab neighbours, actively assisted by the
US military forces being deployed in the Gulf and on Saudi Arabian territory.

Although it was not clear last night how any Arab force would be co-ordinated
with the existing western defence effort, the summit's outcome was warmly
welcomed by the US. The Arabs' decision, following the commitment of forces by a
number of leading Nato countries, is extremely important to Washington as it
ensures that support for Saudi Arabia is not seen just as an American action but
as an international one.

Seizing on the decision as an indication that Iraq was '100 per cent' isolated,
President George Bush signalled last night that a military blockade to prevent
Iraq exporting oil was imminent. He told reporters aboard his presidential
aircraft, Air Force One:'I'm not prepared to use the word blockade but we are
prepared. We're moving ships. I would advise Iraqi ships not to go out with

The decision to commit troops to the defence of Saudi Arabia and its Gulf
neighbours came at the end of a day of bitter exchanges between Arab rulers.
Saudi Arabia, the US and Egypt had been pressing for a regional force to join in
the American-led defence effort. Iraq, which adamantly refuses to withdraw from
Kuwait, condemned the proposal as a move that 'implemented the American will.'

Mr Saddam's address yesterday was designed as an appeal to Arabs over the heads
of their leaders. He called, in effect, for the overthrow of pro-American
leaders in the region. He lambasted Saudi Arabia's King Fahd for requesting
American assistance and called on Egyptians to close the Suez canal to foreign

'Rise up, so that the voice of right can be heard in the Arab nation . . . rebel
against all efforts to humiliate Mecca,' said the message, couched in terms
calculated to appeal to Arab nationalists and Islamic fundamentalists.

The speech coincided with a growing wave of demonstrations in support of the
Iraqi leader in a number of Arab states, including Jordan and Yemen. It also
came against the background of a continuing military build-up in the Gulf.

In other developments yesterday:

Washington's Nato allies and the European Community strongly backed the US stand
against Iraq at meetings of Nato and of EC foreign ministers in Brussels. They
made a specific commitment to defend Turkey against any attack following its
compliance with the international economic embargo against Iraq.

Australia, Canada and Belgium agreed to send forces to join the American,
British and French flotillas already on their way to or taking up position in
the Gulf and West Germany dispatched five minesweepers to the Mediterranean to
replace US ships now deployed in the Gulf.

Tense negotiations continued between western states and Baghdad over the fate of
thousands of foreigners trapped in Iraq and Kuwait.

The Iraqi Government insisted it was not holding the foreigners hostage but the
US warned Iraq that it would be held responsible for the lives of Americans

The negotiations are being complicated by Iraq's insistence that foreign
embassies in Kuwait close and move to Baghdad. As the danger of military
confrontation appeared to rise, President Bush sought to prepare the American
people for a protracted military commitment, while damping speculation that
conflict was imminent.

An American naval force of at least 40 ships is due to be within striking range
of Iraq within a week. US ground forces in Saudi Arabia are expected to approach
50,000 within a month, with 20,000 more nearby.

If there is an Iraqi attack troop numbers may be raised as high as 250,000, it
was unofficially suggested.

US officials have said there is now a three-pronged policy: a military
commitment to deter Iraqi aggression; economic sanctions and diplomatic efforts
to induce Iraq to withdraw from Kuwait; and the encouragement of efforts to
overthrow Mr Saddam.

President Bush and his advisers will not talk publicly about any internal coup
against the Iraqi leader but officials privately say that his removal is
essential if the threat to US interests in the Gulf is to be removed. Diplomatic
attention yesterday was focused mainly on the Arab summit in Cairo. After a day
of stormy deliberations the Arab world ended up more divided than it has been
since the Second World War.

Of 20 participants, 12 - including Syria, Egypt, Morocco and the Gulf states -
voted in favour of assembling an Arab deterrent force. Only mhree - Iraq, Libya
and the Palestine Liberation Organisation - voted against, while Algeria and
Yemen abstained and Jordan, Sudan and Mauritania expressed reservations.

In his opening address, President Hosni Mubarak of Egypt had warned of grave
dangers facing the region.

'The options before us are clear,' he said. 'An Arab action to protect the
higher interests of the Arab nation, preserving Iraq and Kuwait . . . or foreign
intervention that we will have no say or control over.'

Gulf crisis Pages 2 and 3

US in Mideast Page 6

Exiled Kuwaitis Page 6

Editorial comment Page 6

Money Markets Page 11

Wall St Pages 18 and 19

London Stocks Page 13

Finance and Gulf Wkd II

New York:
dollars 1.8735 (1.86855)
dollars 1.8715 (1.872)
DM  2.975 (2.98)
FFr  9.975 (9.9825)
SFr  2.505 (2.5075)
Y  281.0 (280.25)
pounds index 94.9 (same)
New York: Comex Dec
dollars 405.9 (394.8)
dollars 391.25 (385.0)
Brent 15-day Sep
dollars 25.55 (24.775)
New York
DM  1.591 (1.596)
FFr  5.3375 (5.35)
SFr  1.3385 (1.343)
Y  150.45 (149.75)
DM  1.59 (1.5915)
FFr  5.33 (5.3325)
SFr  1.338 (1.3395)
Y  150.15 (149.75)
dollars index 64.6 (64.5)
Tokyo close: 149.75
Fed Funds   7 15/16% (8)
3-mo Treasury Bills:
yield: 7.62% (7.64)
Long Bond:
99 17/32   (99 29/32)
yield: 8.79% (8.75)
FT-SE 100:
2,233.8 (-11.1)
FT Ordinary:
1,743.0 (-9.8)
FT-A All-Share:
1,097.04 (-0.4%)
FT-A World Index:
136.12 (-0.7%)
New York
DJ Ind. Av.
2,716.58 (-42.33)
S&P Comp
335.52 (-4.42)
Tokyo: Nikkei
27,329.55 (-286.18)
3-month interbank:
closing 14 31/32% (same)
Liffe long gilt future:
Sep 82 (82 1/32)


GRAPHIC: Picture, A Moslem fundamentalist in Amman, Jordan, burns the
Americanflag after Friday prayers as a colleague adjusts his head-dress
beforeburning the Israeli flag

                   Copyright 1990 The Financial Times Limited

                             2633 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 11, 1990, Saturday

Crisis in the Gulf;
Twelve vote to send Gulf force;
Text of key points in summit

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 359 words

TWELVE Arab states yesterday voted to send Arab forces to the Gulf to protect
Saudi Arabia and its neighbours against foreign aggression.

The Cairo summit meeting also called for a immediate and complete Iraqi
withdrawal from Kuwait, which Baghdad invaded on August 2.

The voting was as follows:

In favour: Saudi Arabia, Egypt, Syria, Bahrain, Qatar, Oman, the United Arab
Emirates, Kuwait, Morocco, Somalia, Djibouti and Lebanon.

Against: Iraq, Libya, and the PLO.

Abstaining: Algeria and Yemen.

Expressing reservations: Jordan, Sudan and Mauritania.

The summit decided:

To condemn Iraqi aggression against the brotherly state of Kuwait and not to
recognise Iraq's decision to annex Kuwait or any other results arising from the
invasion of Iraqi troops of Kuwaiti territory. It demands Iraq withdraws its
troops from Kuwait immediately and returns it to the state it was in before
August 1.

To confirm Kuwait's sovereignty, its independence and regional security being a
member state in the Arab League and the UN. It also insists on the return of its
(Kuwait's) legitimate Government which was present before the Iraqi invasion. It
supports all measures taken to free its land and fulfill its sovereignty.

To denounce Iraqi threats to Gulf Arab states and to denounce Iraq's build up of
armed forces on the borders of Saudi Arabia. It supports measures taken by Saudi
Arabia and other Gulf Arab states to defend their legitimate rights according to
article two of the joint Defence and Economic Co-operation Pact between Arab
League states and article 51 in the United Nations charter and Security Council
resolution 661, dated August 6. These measures should be stopped immediately
after the total withdrawal of Iraqi troops from Kuwait and the return of
Kuwait's legitimate authority.

To respond to Saudi Arabia and other Gulf Arab states' request to transfer Arab
forces to support their armed forces to defend their land and regional security
against any outside aggression.

The emergency Arab summit has commissioned the Arab League Secretary-General to
follow up the execution of this decision and to report within 15 days.


                   Copyright 1990 The Financial Times Limited

                             2634 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 11, 1990, Saturday

Crisis in the Gulf;
Saddam goes over leaders' heads to appeal to ordinary Arabs


SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 944 words

Iraq's leader has touched popular nerves about the conflict between rich and
poor and the division of the Arab world, reports Lamis Andoni

'O Arabs] O Moslems] O believers in God, wherever you are] This is your day to
rise and spread quickly in order to defend Mecca, which is captive of the spears
of the Americans and the Zionists.'

With these words yesterday President Saddam Hussein of Iraq sought to appeal
over the heads of his fellow Arab leaders to ordinary Arabs and build up a
groundswell of Arab nationalist and Islamic feeling against the arrival of
American troops in Saudi Arabia.

The Arab world has not exactly been fertile soil for democracy and its
governments are not therefore bound to take note of the popular mood, as witness
the agreement by a majority of Arab leaders last night to join in the
multinational defence effort for Saudi Arabia.

But at street level, the signs are that Mr Saddam is having some success. The
American intervention is serving to fuel popular hostility against the US,
Israel and pro-western Arab leaders, and is paradoxically helping to turn Mr
Saddam into something of a popular hero among frustrated Arabs in capitals from
Damascus to Algiers.

Initial shock over the Iraqi invasion and annexation of Kuwait has now been
transformed into a growing wave of popular support. Over the last 48 hours,
pro-Iraqi demonstrations and rallies against 'the

American invasion' have taken place in Algeria, Tunisia, Libya, Yemen, Jordan
and the Israeli-occupied territories. Thousands of Arabs from several countries
are enrolling in Jordan to defend Iraq. Arab activists said there were signs
that the protests would spread to other countries.

More significantly, the American move appeared to have inadvertently achieved a
task that Arab political activists have signally failed to attain:the rallying
of a variety of conflicting Arab political movements to confront American

A shift towards Iraq by the Moslem Brotherhood, the most influential Islamic
political group in the Arab world, indicates that Washington's move has not only
strengthened reviving pan-Arab nationalism but sparked off anger among Islamic

'The US might have committed a fatal mistake by sending its troops to Saudi
Arabia,' wrote the political commentator of Jordan's Al Rai newspaper. 'By doing
so it has placed, and for the first time ever, pan-Arab nationalists and Moslems
in one trench.'

Both trends - which together enjoy the biggest popular following across the Arab
world - have been incensed by what they view as an infringement on Arab national
rights and an aggression against Islamic shrines.

'Who can convince me that those who have given Jerusalem to Israel have come to
defend Mecca and Medina (two of the holiest Islamic shrines) from Baghdad to
serve the interests of Arabs or the Moslems?' asked a Jordanian fundamentalist.

During a rally attended by more than 4,000 Moslems in Jordan yesterday, the
leader of the Moslem Brotherhood in the country, Mohammed Abdul Rahman Khalifi,
expressed full support for 'the Iraqi people's confrontation with the invading
American army' and warned Arab leaders meeting in Cairo against lining up with

This was a striking reversal, since up to now Saudi Arabia, which prides itself
on its role as custodian of Islam's holiest shrines, has been the Moslem
Brotherhood's main financial backer.

Judging from an informal survey of opinion among nationals of various Arab
countries, the Gulf episode and the western reaction to it have pushed to the
surface many of the frustrations of the Arab world:the so far subdued conflict
between rich and poor, accumulated anger at American support for Israel, and
re-awakened resentment at the division of the Arab world into smaller nation

The latter has given credence to Mr Saddam's argument that his merger of Kuwait
is aimed at eliminating all 'artificial borders drawn by the colonialist powers'
who ruled the Arab world in the first half of this century. Equally, the Iraqi
president's argument that in taking over Kuwait he was putting an end to the
squandering of money by Arab oil sheikhs has struck a powerful chord.

And the Palestinian issue is adding fuel to the flames. As ever in the Arab
world, current developments are being viewed largely through the prism of the
Arab-Israeli conflict. Palestinians and other Arabs are accusing the US of

The western description of Hussein as 'Hitler' and 'The Butcher Of Baghdad'
seems only to increase Arab resentment at perceived western double standards.
'They do not have to remind us of Saddam's repression, we know better. But
history has taught us that the US does not mind dictators as long as they are
pro-American ones,' said a member of the Iraqi opposition who has been in exile
since 1980.

Despite the increasing signs of protest in the Arab world, political
commentators are not sure whether scattered rallies and demonstrations will turn
into a mass movement against pro-American leaders.

There are signs of resentment among Egyptians at President Hosni Mubarak's
pro-American line and his proposal to send a multinational Arab force to Kuwait.

Syrians arriving in Jordan from Damascus this week said that Mr Saddam's
popularity was also rising in Syria, traditionally Iraq's bitterest Arab enemy.
Syrians are privately expressing rejection of Syrian President Hafez Al Assad
and calling on him to set aside his old rivalry with the Iraqi leader.

Some Arab commentators are even comparing the wave of Arab nationalist and
anti-western sentiment to that which prevailed around the time of the joint
Israeli, French and British invasion of Egypt in 1956 - which set President
Gamal Abdul Nasser on the road to being paramount Arab leader.


                   Copyright 1990 The Financial Times Limited

                             2635 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 10, 1990, Friday

Tamil Tigers step up campaign


SECTION: SECTION I; Overseas News; Pg. 8

LENGTH: 229 words

MORE THAN 200 people have been killed in eastern Sri Lanka in the past week by
separatist Tamil Tigers, in an escalation of their guerrilla campaign which has
brought deaths among the island's Moslem community as well as the Buddhist

The Tamils make up some 42 per cent of the population in the east, and the
Tigers claim the north and the east as their homeland. The Moslems account for a
third of the eastern population and the Sinhalese the balance.

The province is due to hold a referendum on its future in which the Moslem vote
will be decisive.

The Tigers have in the past relied on support from Moslems, as they speak Tamil.
However, the Moslems identify mainly on an Islamic religious basis, and the
Colombo government is especially sensitive to Moslem sentiment.

Mrs Sirima Bandaranaike, the opposition leader, is to call for a parliamentary
debate on what she calls 'the grave security situation in the eastern province'
after meeting Tamil MPs from the east yesterday.hese MPs oppose the Tigers, who
have murdered many of their leaders.

Mrs Bandaranaike has also met Mr A. H. M. Ashraff, the president of the Moslem
Congress, an important party in the east.

Mr Ashraff, who recently returned from a trip to Libya and Iran, has demanded
that 'Moslem home guards' armed with automatic weapons should be allowed to
protect remote villages.


                   Copyright 1990 The Financial Times Limited

                             2636 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 10, 1990, Friday

European and US banks scale down Mideast business


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 747 words

BANKS in Western Europe and the US were yesterday scaling down business in the
Gulf and Saudi Arabia amid rising concern about a confrontation between the US
and Iraq.

One London bank said: 'We are now just waiting for Iraqi reaction and are all
somewhat surprised that nothing has happened since the American attitude became
apparent two nights ago.' Few bankers in the Middle East or London would say
whether international banks were cutting off lines of credit to Gulf customers.

However a senior manager of one Riyadh bank said all US credit lines to his bank
had been cut, both for trading and treasury transactions. British banks had so
far kept their lines open, he said.

US banks had been refusing to confirm letters of credit to his institution and
would not offer spot rates or forward quotes for foreign currency deals. 'It's
not a crisis, just a damned nuisance.' he said.

In some Gulf states there were reports of panic withdrawals of cash from banks
and shortages of hard currencies, including dollars and sterling. Worst affected
were said to be foreign banks and those with large numbers of expatriate

In London, the treasuries of the large clearing banks held internal meetings to
consider how they should handle Middle Eastern business.

Barclays Bank, largest of the Big Four clearers, said it had stopped making a
market in Middle Eastern currencies, but most other large banks indicated that
they were merely reducing their activity.

Midland, one of the British banks most active in the Middle East, said it had
cut new activity on its lines. 'Of course one is not out there busily lending
money at the present time but conserving liquidity,' it said.

Among US banks, Manufacturers Hanover said it was keeping open lines of credit
to Arab partners, but was not doing any business through them. 'We have loyalty
to our friends, but I have bills to pay at the end of the month,' one banker

Manufacturers Hanover is believed to be mirroring other US banks in deciding to
stand back and await developments. US banks are nervous about the situation in
the Gulf but do not want to cancel credit lines because of the amount of work
involved in reopening them.

Mr Haiber Darwish, general manager of Arab National Bank in Riyadh, in which
Jordan-based Arab Bank holds a 40 per cent share, said some overseas banks had
been imposing tough conditions before confirming letters of credit.

UK banks and UK-based foreign banks are circumspect but are also unwilling to do
much business with customers in the Middle East. Bankers say some business is
proceeding at lower levels and as yet, credit lines are still open.

Some reports suggested that a Dollars 30m loan facility for a Kuwaiti company,
launched for syndication in the market three weeks ago, was in danger of being
ditched yesterday. The facility was arranged by Arab Banking Corporation, Bank
of Tokyo and Gulf International.

In addition, Standard & Poor's, the US credit rating agency said it had put Arab
Banking's long-term bonds and certificates of deposit on credit watch, meaning
it is considering downgrading the creditworthiness of the bank's bonds and
commercial deposits.

Minority positions in the bank are held by Kuwait's ministry of finance and the
Central Bank of Libya which are both subject to US sanctions.

New York
dollars 1.86855 (1.871)
dollars 1.872 (1.866)
DM 2.98 (2.975)
FFr 9.9825 (9.9775)
SFr 2.5075 (2.5075)
Y 280.25 (280.0)
Pound index 94.9 (94.8)
New York: Comex Dec
dollars 394.8 (392.2)
dollars 385.00 (382.25)
N SEA OIL (Argus)
Brent 15-day
dollars 24.775 (24.75)
Tokyo open: Y149.75
New York
DM 1.596 (1.593)
FFr 5.35 (5.341)
SFr 1.343 (1.3385)
Y 149.75 (149.8)
DM 1.5915 (1.5945)
FFr 5.3325 (5.3475)
SFr 1.3395 (1.344)
Y 149.75 (150.1)
dollars index 64.5 (64.6)
Fed Funds 8% (8 1/8)
3-mo Treasury Bills:
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Long Bond:
99 29/32 (98 15/16)
yield: 8.75% (8.84)
FT-SE 100:
2,244.9 (+7.4)
FT Ordinary:
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FT-A All-Share:
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FT-A World Index:
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New York
DJ Ind. Av.
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S&P Comp
339.94 (+1.59)
Tokyo: Nikkei
27,615.73 (-893.41)
3-month interbank:
closing 14 31/32 % (same)
Liffe long gilt future:
Sep 82 1/32 (81 9/16)


                   Copyright 1990 The Financial Times Limited

                             2637 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 10, 1990, Friday

Crisis in the Gulf;
Thatcher cements ties with Bush



LENGTH: 568 words

NOT a shadow of doubt existed among the senior British ministers who broke off
their holidays this week to discuss Britain's role in the Gulf crisis about the
course Mrs Margaret Thatcher would take.

Once the US had committed troops to Saudi Arabia and sought the support of its
allies, it was a foregone conclusion Mrs Thatcher would offer material and moral
assistance. Britain's strategic interests and obligations in the region, Mrs
Thatcher's strong instincts about the need to confront aggressors and her belief
in the 'special relationship' with Washington, all pointed in the same

Her two meetings over the past week with President George Bush served to
reinforce those views. Even before the US commitment was formally announced, she
had decided Britain would play its part. If any of her senior ministers
disagreed with her, none has been prepared to say so. Even the Treasury, jealous
guardian of a rapidly-shrinking budget surplus, has not quibbled about the cost.

Inevitably, Whitehall talk has turned on the 'Falklands factor', an allusion to
Mrs Thatcher's determined action in 1982 in sending a task force to recapture
the islands after invasion by Argentina.

While ministers said an obvious parallel existed in terms of the speed in which
she had acted this week, they played down any other comparisons. Mr Tom King,
Defence Secretary, yesterday stressed that the British air and naval forces
deployed in the Gulf would adopt a defensive posture.

Whitehall officials stressed that the relatively modest size of the forces - two
squadrons of fighter-aircraft, with appropriate forces and minesweepers to
support the existing Armilla Patrol of three frigates in the Gulf - showed it
was there to deter rather than provoke confrontation. They also pointed to other
factors to explain why Britain had acted in advance of any similar moves by its
European partners.

The coincidence of the Iraqi invasion with Mrs Thatcher's visit to the US meant
she was on the spot as US policy developed. Britain's long-standing ties with
many of the Gulf states meant the UK received requests for help ahead of its
other western allies.

The officials might have added that Britain's extensive trade and commercial
links with the smaller Gulf states meant it had more to lose than many of its
partners by further Iraqi aggression. There was considerable satisfaction in
Whitehall yesterday about the way the crisis has re-established Britain's close
alliance with Washington.

Officials said that after a year in which the US had been seen to move closer to
Germany, Mrs Thatcher's action had shown Britain was the ally on which he could
most depend. As after the bombing of Libya in 1986, when Mrs Thatcher allowed
the US to use UK air bases, Washington now knew 'who its real friends were', one
official said.

But it is clear that if Mrs Thatcher was prepared, as in the past, to act in
advance of her European allies in support of US action, the Government would
like the gap to close quickly.

Mr King and Mr Douglas Hurd, Foreign Secretary, were optimistic yesterday that
other European and Arab nations would help. Mr King alluded to contacts with
Paris and Rome, while Mr Hurd acknowledged the risk that Iraq would brand a
bilateral force a symbol of 'Anglo-American imperialism'. As one official
said:'We are glad to be out in front, but would be happy not to be left there'.


GRAPHIC: Picture, Saddam supporters, waving banners and portraits of
thePresident, demonstrate outside the US embassy in London

                   Copyright 1990 The Financial Times Limited

                             2638 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 9, 1990, Thursday

Crisis in the Gulf;
Embargo to hit E Europe



LENGTH: 205 words

IRAQ's invasion of Kuwait and the subsequent United Nations trade embargo
against Iraq could not have come at a worse time for eastern Europe.

Strapped for cash and thirsty for oil, Bulgaria, Czechoslovakia and Hungary have
to shop around for oil supplies just a month after the Soviet Union's decision
to reduce its energy exports to the region.

In the past these countries tended to seek additional supplies from the Middle
East to make up any shortfalls.

They did not have to pay in hard currency; Iraq, like Syria and Libya, has
outstanding loans from several east European countries.

Iraq owes Dollars 16.5m (Pounds 8.9m) to Hungary and an estimated Dollars 1bn to
Bulgaria. Budapest and Sofia felt that if they could not reclaim their loans,
they would convert part of them into oil. Last month alone, Iraq exported
565,000 barrels a day of crude to eastern Europe.

Bulgaria has signed a contract with Iraq for the supply of 5m tons spread over
four years. But last night it and Czechoslovakia said they would join the
international economic embargo. An official at the Hungarian Foreign Ministry,
said:'We will just have to look for our oil elsewhere.' That will be easy -
paying for it will be difficult.


                   Copyright 1990 The Financial Times Limited

                             2639 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 8, 1990, Wednesday

Crisis in the Gulf;
Bush succeeds in stiffening Saudi spines



LENGTH: 985 words

AT FIRST sight, President George Bush's decision last night to dispatch US
troops and warplanes to Saudi Arabia looks like an old-fashioned demonstration
of raw American power. In fact, the presidential order caps several days of
intensive US diplomacy aimed at 'internationalising' the Gulf crisis and
exerting collective pressure to isolate President Saddam Hussein of Iraq.

The multilateral approach scored its biggest victory on Monday in New York when
the United Nations Security Council voted 13-0 to impose sweeping economic
sanctions against Iraq. In essence, the US wants to bring such economic pressure
to bear on his debt-ridden regime that the Iraqi leader will be forced to end
the occupation of Kuwait. The collective approach also appears to have provided
the key to coaxing the Saudis to open up their bases.

Sensitive to Saudi concern about its sovereignty, the US persuaded Egypt to
agree to deploy at least two mechanised divisions inside Saudi Arabia. The
result:an (almost) multinational 'trip wire' defence against a possible Iraqi
invasion from Kuwait.

Last night US officials were keen to avoid any suggestion that the new joint
force was offensive in nature. Instead, they cited an 'imminent danger' to Saudi
Arabia posed by the Iraqi troops on the Kuwait border.

Using intelligence reports and satellite photographs, Mr Richard Cheney, US
Defence Secretary, drove home this threat during his mission to Jeddah and Cairo
this week.

The need to stiffen Saudi spines was viewed as paramount: first, Mr Bush wanted
to forestall an Iraqi thrust into the vital Saudi oilfields; second, he and
Pentagon planners were firm that US forces needed access to Saudi facilities in
order to maximise Washington's options for a counter-strike against Baghdad.

Throughout the current Gulf crisis, Mr Bush has been extraordinarily careful to
dress his military and diplomatic moves in the language of multilateralism and
collective action. And, in this respect, he has broken with the unilateral
action favoured by some of his post-war predecessors, particularly former
President Ronald Reagan.

The US invasion of Grenada in 1983, the bombing of Libya in 1986 and, initially,
the US escort mission in the Gulf in 1987, were all undertaken with minimum
consultation, often over the objection of many US allies. In 1986, for example,
France refused overflying permission for F1-11 long-range bombers on their way
to Libya.

Mr Bush, by contrast, has rediscovered old-fashioned diplomacy (an art which
Harold Nicholson once wrote was completely lost on the Americans). Ever since
the crisis broke last week he has dialled a dozen world leaders:President
Francois Mitterrand of France; Chancellor Helmut Kohl of West Germany; Mr Giulio
Andreotti, current president of the EC Council of Ministers; and Prime Minister
Toshiki Kaifu of Japan.

His emphasis on the personal touch has paid off. So too, has his renewed
interest in exploiting an invigorated United Nations, an institution long
despised in Washington as an anti-American talking shop.

A more constructive Soviet approach - first spelt out by Mr Mikhail Gorbachev's
speech at the UN in December 1988 - has certainly prodded the US to rethink.
Last week's unprecedented joint US-Soviet statement on the Gulf - followed by EC
and Japanese trade sanctions - set the stage for the UN Security Council vote
last Monday, the most sweeping in its 45-year history.

Sir Crispin Tickell, British ambassador to the UN, who himself played an
important role in smoothing the US resolution's passage, said the circumstances
in which the Soviet Union and China sided with the west showed 'the new UN, not
the Cold War UN.'

The question now turns to enforcement of the sanctions. Mrs Thatcher - whose
steely performance during her US visit provided a useful foil for Mr Bush - was
explicit in suggesting that military methods, possibly a naval blockade, may be

Mr Bush agreed: 'We need to discuss full and total implementation of these
sanctions, ruling nothing out at all.'

Some US officials suggest that the UN resolution by itself provided enough cover
for both Turkey and Saudi Arabia to shut down the pipelines crossing their
countries, which transport 90 per cent of Iraqi oil to the outside world. But
nobody is risking their all. US military planners are well aware that any Saudi
move to shut down Iraq's pipeline could be construed as a casus belli by Iraq -
notwithstanding the imminent deployment of US and Egyptian forces.

The Iraqi order to all but close the twin Turkey pipelines is viewed as a clever
pre-emptive strike, bowing to the inevitable while turning up the pressure even
more on the Saudis to keep the oil flowing.

In this respect, the deployment of elements of the 82nd Airborne is not nearly
as important as the reported agreement by the Saudis to grant landing rights to
US fighter bombers and heavy transport aircraft. This introduces a flexibility
in the US ability to combine with Saudi air power to deter or break up an Iraqi
tank-led invasion.

Complementing these forces, of course, is the rapid naval build-up in the Gulf
and the eastern Mediterranean. Mr Cheney is said to have sought Egyptian
permission to allow the aircraft carrier battle group to cross the Suez Canal
into the Red Sea. This would mean that within two weeks or less more than 45 US
warships could be within striking range of Iraq.

The Pentagon this week revealed tentative plans to invite the Soviet Union to
join a multinational force patrolling the Gulf, building into a possible future

Other options include deploying Nato warships as part of a Gulf naval blockade
and/or using British and US jets with landing rights in several Nato countries,
including Turkey.

It is a clever, sophisticated approach to disguising the fact that the US is
largely pulling the strings. Mr Bush might even call it leadership.


                   Copyright 1990 The Financial Times Limited

                             2640 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 7, 1990, Tuesday

Scargill given unanimous backing of Midlands area


SECTION: SECTION I; UK News - Employment; Pg. 7

LENGTH: 338 words

MR ARTHUR Scargill and Mr Peter Heathfield were yesterday given the unanimous
backing of the National Union of Mineworkers' third largest area over their
handling of funds during and after the 1984-85 miners' strike.

The two NUM national officials were backed by leaders of the Midlands area,
which has about 5,000 of the NUM's 55,000 members, after facing questions about
their handling of funds at a meeting of the area's council.

The meeting voted to support Mr Scargill and Mr Heathfield if the union holds a
special delegate conference this autumn to discuss criticisms of the two men
made in the inquiry into their conduct by Mr Gavin Lightman QC.

The meeting was the first of more than 30 to be addressed by Mr Scargill in his
campaign to be vindicated by the union over the handling of funds received from
the Soviet Union and east Europe during the strike.

Mr Joe Mills, Midlands area secretary, said after the meeting that the two
national officials had faced questions on every aspect of the affair from the 30
Midlands area leaders who had attended, and had provided full answers.

The backing of the Midlands area is a useful start to the two men's campaign to
be vindicated after being sued by their own national executive for the return of
up to Pounds 1.8m held by the Paris-based International Miners' Organisation.

Although they are likely to face stronger opposition from NUM areas such as the
Cosa white collar section, and in South Wales, the backing of the Midlands area
is likely to be added to by votes in strongholds such as Yorkshire.

Mr Scargill faced questions about whether money had been received from Libya
during the strike following a report in the Sunday Times that Colonel Muammer
Gadaffi had said money was given to the NUM from Libya during the strike.

Mr Scargill denied at the weekend that his union had cashed a cheque for
thousands of pounds from Libya during the strike. The Lightman inquiry found
that the NUM had sought funds from Libya and might have received them.


                   Copyright 1990 The Financial Times Limited

                             2641 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             August 6, 1990, Monday

Scargill denies receiving Libyan cash


SECTION: SECTION I; UK News - Employment; Pg. 5

LENGTH: 294 words

MR ARTHUR SCARGILL, president of the National Union of Mineworkers, yesterday
denied that his union cashed a cheque for thousands of pounds from Libya during
the national pit strike.

'The suggestion that a cheque was made payable to the NUM and cashed cannot
possibly be true . . . because we were sequestrated,' he said.

Mr Scargill was commenting on a report in the Sunday Times claiming Colonel
Muammer Gadaffi had said money was given to the NUM by the General Producers
Union of Libyan Workers for 'humanitarian reasons.'

Mr George Rees, general secretary of the south Wales NUM, said that he and the
three other members of the executive looking into union finances would be asking
Mr Arthur Scargill for his views on the allegations and consulting legal
advisers over the issue.

'There have to be more discussions,' said Mr Rees, although he expressed doubts
that further investiga-tions could produce more evidence.

The Libyans had failed to respond to requests for information from Mr Gavin
Lightman QC when he conducted a three-month investigation into the union's

In the Sunday Times article Colonel Gadaffi said he did not know the details of
the agreement between the General Producers' Union of Libyan Workers and British
Miners but he was sure money was handed over.

Mr Mohammed Abdullah Ali Al-Khalandi, a Libyan union official, is quoted as
saying that Dollars 200,000 was given to British miners and later cashed.

Mr Lightman, in his report, found that there was no material proof that Libyan
money did reach Britain from the NUM.

However 'the material before me suggests that a payment of Pounds 150,000,
stated to have been received from the CGT (a French trade union grouping), may
have been received from Libya.'


                   Copyright 1990 The Financial Times Limited

                             2642 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             August 6, 1990, Monday

The limits of an assets freeze

SECTION: SECTION I; Editorial; Pg. 10

LENGTH: 680 words

ATTEMPTS BY the super-powers to freeze the assets of hostile governments are
usually messy and highly contentious affairs. The US Government's move against
Iranian assets in 1979 was much criticised in the international financial
community, and the legal tangles which it created took years to unwind. The
freezing of Libyan assets in 1986 led to lengthy court cases in the UK, which
had not followed the US move.

So the speed and wide level of support for such sanctions in the wake of Iraq's
invasion of Kuwait is striking. Even the UK authorities, which are usually at
least as much concerned with the well being of the City of London as with grand
geo-political gestures, were only a few hours behind the US authorities in
freezing Kuwaiti assets on Thursday.

That decision was easy enough, since the Kuwaiti invasion had thrown into doubt
the ownership of most of the assets concerned. The freeze on Kuwait's assets is
aimed specifically at preventing a puppet regime from grabbing the wealth of a
legitimate government.

From the British point of view, Kuwait has been one of the most important
customers of the City of London. Efforts to protect its interests now that it
has been mugged are not likely to damage the City in the battle for a leading
position among the international capital markets.

Different in kind

The subsequent decision by Britain and other European countries to follow the US
lead in imposing a freeze on Iraqi assets is different in kind, in that it is
intended as an act of retribution against a hostile government. In that respect,
it has more in common with the US moves against Iran and Libya, and the UK
freeze on Argentine assets in 1982. But the big difference is that this move has
a far wider level of international support and is part of a broad economic
package, which should reduce the risk of squabbles over jurisdiction or
competitive advantage.

The objectives of the freeze are straightforward: to protect the rightful owners
of Kuwait's assets, and to punish a wrongdoer. So it should be relatively easy
to resolve immediate questions of definition:for instance, about what
constitutes a resident in the case of either an individual or a bank. There were
creaking noises in the Bank of England last Friday, as the former heroes of the
exchange control department (which was abolished in 1979 and performed a very
similar function) began to rally round. Central banks need to allow a range of
general exceptions to their rules to let ordinary people get on with their
legitimate business.

More clear cut

Although the issues in this case are more clear cut than in the past, there are
lessons to be drawn from the more controversial precedents.he most important is
that all the central banks involved should go as far as they possibly can to
harmonise their approach to these regulations. The general aim should be to hit
the target without injuring bystanders. Given the complexity of international
transactions, it would be highly undesirable for the Bank of England to allow
one form of transaction in sterling which the US authorities banned in dollars.

Past experience also shows that governments should not attempt to impose their
jurisdiction on banks' foreign offices through the courts.he best they can do is
to persuade overseas branches to abide by the spirit of their guidelines.

An obvious step now would be to set up some mechanism for anticipating problems
in international transactions, rather than leaving them to the courts or to some
form of 'post-war' arbitration.

But the really difficult tests lie further ahead. For the time being, the
financial community seems broadly supportive of the sanctions. But because
Kuwait has such an important position in the market place, they will sooner
rather than later cause liquidity problems for some intermediaries. No-one can
yet hazard a guess at the likely scale. But it is a safe bet that the longer the
legitimate Government of Kuwait is out of the picture, the more pressure there
will be for other countries to come to terms with its successors.


                   Copyright 1990 The Financial Times Limited

                             2643 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 4, 1990, Saturday

Iraq says troops to start Kuwaiti pull-out tomorrow;
US pledges military support for Gulf states Baker and Shevardnadze lead intense
diplomatic effort


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 841 words

Iraq annouinced last night that it planned to start withdrawing its troops from
Kuwait tomorrow after a day of intense diplomatic pressure led by the US and the
Soviet Union.

However, the statement from an official of Iraq's Revolution Command Council
less than 48 hours after the invasion of the small Gulf state by Iraqi forces
was treated with some scepticism by the US and Britain. 'We have no
confirmation,' a White House spokesman said.

The move followed an unprecedented display of post-Cold War superpower
co-operation and clear indications by the US that it would be prepared to
intervene militarily to support other Gulf states which might be attacked by

The White House spokesman, asked about Baghdad Radio's statement that an
Iraqi-supported government would be left in charge in Kuwait after the troops
had been withdrawn, said it would be 'a puppet government' lacking any

The Iraqi official said his country's troops would be pulled out 'unless
something appears which could threaten the security of Kuwait and Iraq.' He
categorically ruled out any return of the ruling al-Sabah family. There would be
'no return to the extinct regime after the sun of dignity and honour has shone,'
he said. He did not say how long the withdrawal would take.

The first signs that Iraq was beginning to respond to international pressure
came in an announcement yesterday evening by Mr Eduard Shevardnadze, the Soviet
Foreign Minister, who said that Iraq would 'very soon' withdraw from Kuwait,
which it had invaded on Thursday.

Mr Shevardnadze said the Soviet leadership had sent a message to President
Saddam, but he did not reveal the contents.

His statement came after a meeting with Mr James Baker, the US Secretary of
State, in Moscow at which they strongly condemned Baghdad's action as a 'crude
attack' and issued an appeal for a world ban on arms supplies to Iraq.

The statement was all the more significant since the Soviet Union has long been
Iraq's main supplier of arms, although Moscow suspended weapons shipments on the
day of the invasion.

At the same time it was announced in Saudi Arabia that President Saddam Hussein
of Iraq and Sheikh Jaber al-Sabah, the Emir of Kuwait would join other Arab
leaders for a summit in the Saudi Red Sea port of Jeddah tomorrow in an effort
to end the Gulf crisis. Last night, however, a Kuwaiti Minister threw doubt on
the Emir's attendance at the meeting. 'He cannot accept to sit together with an
aggressor,' Mr Abdul-Rahman al-Awadi said.

As the pressure mounted on Iraq, whose troops were reported to have moved close
to the Saudi Arabian border, President George Bush warned that he would be
inclined to give the Saudis any help they wanted to repel an Iraqi invasion.

Mr Bush said the Gulf situation was grave and that he was in constant touch with
the leaders of Saudi Arabia, Britain, Turkey and other concerned nations.

US Congressional leaders said Americans had to be ready to fight alongside the
Saudis if invasion came. Saudi Arabia is America's top foreign oil supplier,
providing 15 per cent of US imports.

Earlier, the US had warned that it might use military force if Iraq attacked any
other countries in the Gulf region. The US position was made clear at a Nato
meeting in Brussels. The warnings coincided with a statement by the US Defense
Department that a US aircraft carrier, a battleship and four escort ships would
leave for the Mediterranean nextuesday.

Meanwhile, the calling of the Arab summit was announced by King Hussein of
Jordan, after a trip to Baghdad, the Iraqi capital, where he held talks with
President Saddam.

Apart from King Hussein, the Emir of Kuwait and President Saddam, at least two
other Arab leaders - President Hosni Mubarak of Egypt and King Fahd of Saudi
Arabia - are expected to attend the Jeddah meeting.

Arab League Foreign Ministers, meeting in Cairo, had earlier condemned Iraq for
its 'aggression' against Kuwait, but seven of the 21 members - Iraq, Jordan,
Libya, Yemen, Sudan, Djibouti and the Palestine Liberation Organisation - did
not endorse the resolution.

In New York the big five members of the United Nations Security Council
discussed possible economic sanctions to enforce the council's resolution
demanding Iraq's immediate withdrawal from Kuwait.

Britain made clear it was prepared to impose comprehensive sanctions against
Iraq, if agreement could be reached on such measures with its western partners.
Mr Douglas Hurd, the Foreign Secretary, said Britain was prepared to go along
with any 'collective and effective' action.

Mr Hurd warned that any attack by Iraq on Saudi Arabia would escalate the
situation to a 'very dangerous state.' Meanwhile, Britain ordered two frigates
into the Gulf to join a destroyer already there.

Occupation of Kuwait; Superpower statement Pages 2-3

Editorial comment Page 6

Blockading oil supplies Page 6

London stocks Page 13

World stocks Page 19

Freezing of Kuwaiti assets Page 22

Double blow hits Dow; Dilemma for investors Weekend FT, Page 2


GRAPHIC: Picture, James Baker and Eduard Shevardnadze after their talks,
unprecedented display of post-Cold War co-operation

                   Copyright 1990 The Financial Times Limited

                             2644 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            August 4, 1990, Saturday

Iraqi occupation of Kuwait;
Little hope for military response without Arab backing - Recapture of Kuwait
from invaders a 'non-starter'

BYLINE: DAVID WHITE, Defence Correspondent

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 700 words

BRITISH and US military experts doubt whether the US, on its own or in a joint
operation, has any realistic option for armed response against Iraq without
support from other Arab countries in the region.

A counter-invasion of Kuwait is considered out of the question. 'It would be
asking for an operation of the proportions of Vietnam,' Colonel Michael Dewar,
deputy director of the International Institute for Strategic Studies, said.

However, pressure for action would become unsurmountable if US citizens in
Kuwait were harmed, the experts said. They also predicted further
'muscle-flexing' and possible preventive deployments. The west, they said, would
need to take account of the potential reaction of Iraq to economic pressure and
sanctions and provide some sort of military guarantee to back those measures.

The theoretical options for military action in reply to Iraq's invasion of
Kuwait fall into four main categories:A land assault aimed at recapturing
Kuwait. The experts dismissed this outright. Iraq could rapidly reinforce its
50,000 men in position in Kuwait. To take on Iraq militarily would require
months of preparation, they said.

A punitive strike such as the US carried out against Libya in 1986.his, the
experts said, would be much more difficult than in the Libyan case and require
far greater military means. It might also backfire by provoking President Saddam
Hussein to further aggression.

A blockade of shipments through the Gulf. This would be extremely difficult
without support from neighbouring countries, would leave warships exposed to
attack in Gulf waters without room to manoeuvre, and would risk an escalating
conflict, the experts said.

Deployments elsewhere in the region to deter further Iraqi aggression.his kind
of 'demonstrative' deployment is seen as possible, especially in the US, but
British experts said countries such as Saudi Arabia might regard it as more
embarrassing than helpful.

Group Captain David Bolton, director of the Royal United Services Institute for
Defence Studies, described the military recapture of Kuwait as a 'non-starter'.

'In any event, you're dealing with the strongest Arab military power, and it is
battle-hardened,' he said. Iraq, with 1m men under arms, some 6,000 tanks, 3,500
artillery pieces and a range of rockets and other equipment, had internal lines
of communication that would enable it to bring much heavier forces into Kuwait.

The forces that would be needed to recapture Kuwait would have to be 'very large
indeed'. They would need to establish bases, overflying rights and lines of
supply, and set up command and control arrangements - especially difficult in
the case of a multinational operation.

The option of a seaborne landing up the Gulf was 'ridiculous', he said, because
of the restricted sea room which would make ships vulnerable. Without requests
for help from other Arab countries, the US would be unlikely to resort to the
contingency forces earmarked for use in the region. There might be a western
role in deterring further Iraqi adventurism in other countries of the region, if
requested, Group Captain Bolton said. A 'surgical' strike against one or more
selected targets might be the most tempting option to the US. However, the
experts said Baghdad had learnt from the experience of the Israeli bombing raid
against its Osiraq nuclear complex in 1981. Its sensitive facilities were now
well protected and military assets such as chemical weapon stocks dispersed
through the country.

A punitive attack would therefore require 'a massive effort with limited
probability of success' and almost certainly could not be done without incurring

Britain yesterday sent two more warships to the Gulf, re-assembling its full
Armilla Patrol. The Ministry of Defence said last night that two frigates would
join the destroyer HMS York, now in Dubai with an auxiliary vessel. One, HMS
Jupiter, until recently in Mombasa, was attached to the patrol, while the other,
the more modern HMS Battleaxe, was in Penang, Malaysia, on call to join the
others if necessary. Britain first sent warships to the southern Gulf to protect
British-flagged merchant shipping in 1980.


                   Copyright 1990 The Financial Times Limited

                             2645 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             August 3, 1990, Friday

Bogeyman out of the shadows



LENGTH: 1094 words

Edward Mortimer on Iraq's President Saddam Hussein

People in the West, including those in a position to know better, have been slow
to recognise the true nature of President Saddam Hussein. Again and again he has
given evidence of his exceptional personality and the unique character of his
regime. But somehow it has never quite registered. There have always been
reasons to overlook it, or to explain it away as a regional, cultural or even
racial phenomenon.

The sad truth is that people in the West have very low expectations of Arab
regimes, and are easily persuaded that they are all much of a muchness. All too
many do not even distinguish between Arab countries and the rest of the Islamic

Both Arab and Iranian leaders in the Middle East have succeeded in making
themselves western bogeymen. The first in modern times (incredible as it now
seems) was Mohammed Mossadegh, Prime Minister of Iran in the early 1950s, whose
only real 'crime' was to expropriate a British oil company.

Then there was Gamal Abdul Nasser, ruler of Egypt from 1952 to 1970, who
nationalised a British and French-owned canal, made a serious effort to
establish his hegemony in the Arab world by mobilising popular feeling against
other Arab governments, intervened disastrously in a civil war in another Arab
country, and, by a piece of grossly miscalculated brinkmanship, provoked Israel
into demolishing the armed forces of three Arab states (including his own) and
occupying large tracts of Arab territory.

Colonel Muammer Gadaffi, ruler of Libya since 1969, sought to take up Nasser's
mantle. His prestige in the wider Arab world was short-lived, but his success as
western bogeyman has been considerable, based partly on his rhetoric, partly on
erratic support for various terrorist movements, and partly on forays into
sub-Saharan Africa. After 1978, however, he was eclipsed by Ayatollah Khomeini
of Iran, who led a revolution of a more radically novel character in a country
of greater strategic importance.

Other leaders in the region have generally been assumed to be paler reflections
of one or all of those four. Only Anwar Sadat of Egypt achieved a really
positive image, and his assassination in 1981 confirmed the generally negative
western view of the region's politics.

Within that stereotype, Mr Saddam for a long time kept a relatively low profile.
Until 1979 he was formally only vice-president, and his country was not one that
impinged greatly on western consciousness. He became a world figure only with
his ill-judged attack on Iran in September 1980. He had expected a quick
walkover, not eight years of gruelling warfare in which his country's very
survival would seem in doubt. Yet the circumstances were such as to ensure him
considerable western complaisance, if not sympathy.

There was provocation, after all: the Iranian revolutionary regime made no
secret of its incitement of the Iraqi population to overthrow him; and there was
the classic escalation of border incidents for which it was difficult to
apportion responsibility. Iran was also holding 50 US diplomats hostage. Anyone
who could biff the Ayatollah was seen as a good egg.

President Saddam, whatever his faults, came to be seen as the last bulwark of
'civilisation' against the tide of Islamic vengeance. He got away, quite
literally, with murder, including the use of chemical weapons - a flagrant
breach of international law.

Only when the war ended in 1988, and the chemicals were turned against Kurdish
civilians in northern Iraq, was there a serious international outcry. Even then
it fizzled out. No state wished to quarrel with a powerful ruler of what
promised to be a rich country, even if temporarily saddled with enormous war

Last year it emerged that Mr Saddam was playing fast and loose with western
banking relations in order to finance a massive programme of illegal imports of
various weapon components. This year he attracted further opprobrium by, in
quick succession, executing a London-based journalist, threatening to 'consume
half of Israel' with chemical weapons if Israel attacked Iraq, and being caught
trying to smuggle nuclear triggers and parts of a giant gun from various western
countries. Many Arabs rallied to his side against the barrage of adverse western
publicity. Others feared he would repeat Nasser's mistake of 1967, giving Israel
provocation for a pre-emptive strike. But last month it was against
fellow-Arabs, notably Kuwait and the United Arab Emirates, that he turned his
guns - metaphorically, and now literally.

Perhaps now the world will realise that Mr Saddam is not just another military
dictator. In fact he is not military at all, though some say that he would have
been had he not failed the exam for the military academy. Certainly he is no
stranger to violence. In 1959 he took part in an unsuccessful attempt to
assassinate an earlier and much more amateurish Iraqi dictator, General
Abdulkarim Kassem. Even as President, he is believed to have personally executed
ministers and army officers accused of plotting against him.

But his violence is that of the political activist or conspirator, not the
'minimum force' of the professional military man. Like Stalin and Hitler (his
true models), he rose to power through the manipulation of a highly organised
political party with an elaborately articulated revolutionary theory. Like them
he has been prepared to 'liquidate' thousands of his party comrades and
followers in order to consolidate his hold on power. But that does not mean that
in analysing Iraqi politics today one can ignore the role of the Arab Baath
Socialist Party, any more than give a coherent account of Hitler's or Stalin's
regimes without according central roles to the National Socialist and Communist

Saddam Hussein is no communist but, as the most perceptive analyst of his
regime* has written, 'Stalinism as forged in the reign of terror of the 1930s
and late 1940s . . . must be considered the generic model for understanding
Ba'athism.' He is indeed a national socialist, not perhaps in the sense of being
a systematic anti-semite but certainly in his belief that national energies must
be harnessed by fear and canalised by state control. Also, it seems, in his
determination to unite the 'nation' by exploiting irredentist feelings and
crushing state frontiers.

Five weeks ago when asked his thoughts on his reputation as the 'Butcher of
Baghdad', he replied:'Weakness doesn't assure achieving the objectives required
by a leader.'

*Samir al-Khalil, Republic of Fear, Hutchinson Radius, Pounds 18.95.


GRAPHIC: Drawing, no caption

                   Copyright 1990 The Financial Times Limited

                             2646 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             August 3, 1990, Friday

Invasion of Kuwait;
Action to freeze assets signals Western concern



LENGTH: 749 words

THE co-ordinated Western moves to freeze Kuwaiti assets, covering two of the
three main world financial markets, indicate the depth of alarm the invasion has

While the freezing of a country's financial assets in disputes has not been
uncommon over the last 20 years, the Iraqi invasion has prompted the broadest
action yet. France, an important supplier of weapons to Iraq in its war against
Iran, also said yesterday it would freeze the assets of both countries.

The US has twice used the weapon in recent years. In 1979, it froze Iranian
assets over the hostage crisis and in January 1986, President Reagan froze
Libyan assets in response to Colonel Gadaffi's alleged involvement in terrorist
attacks on Rome and Vienna airports. Neither freeze was joined by Britain.

The importance of the British joining the freeze was underlined by a 1987
English court ruling which held that the US order against Libya could not be
applied to US banks in London.

The wording of the US order covers government assets of both Kuwait and Iraq,
while the UK move will have an effect only on Kuwaiti assets, but it covers both
government and private citizens in Kuwait. The British order was made under the
provisions of the 1964 Emergency Laws Act, which consolidated wartime measures
and was used in the freeze of Argentine assets in the 1982 Falklands War.

The British move was intended to prevent a puppet regime in Kuwait from
channelling Kuwait's resources into Iraq's war economy.

The possibility of a British move against the Iraqi government was being left
open, though it would be mainly of symbolic significance, given Iraq's smaller
cache of assets overseas.

While the details of the British asset freeze were not immediately clear, it
will almost certainly bring to a halt the activities of the Kuwait Investment
Office, the country's main overseas investment vehicle. The KIO is owned by the
Kuwait Investment Authority, ostensibly part of the Ministry of Finance and the
government but which, in effect, has been controlled by the office of the Emir
of Kuwait.

The KIO was said yesterday morning to be operating in the UK stock market,
although some securities houses would only deal with it as a seller of stock.
However, operations were said to have ceased after the mid-afternoon
announcement from Mr Douglas Hurd, the Foreign Secretary. A KIO official said a
statement was under consideration.

If the British government were to recognise a Kuwait government in exile - the
Emir was in Saudi Arabia yesterday - it is possible that at some point he might
be given access to the assets.

Against the background of turmoil in the financial markets - asset freezes bring
significant questions about the settlement of deals already done as well as the
parties covered by the freeze - the Bank of England was in close contact with
Kuwaiti banks. On hearing news of the invasion, other banks immediately closed
their lines of credit to Kuwaiti banks.

Details about the scope of the British action await clarification from the Bank
of England, not likely before the beginning of next week, given their
complexity. This will answer such questions as the status of the branches of
Kuwaiti banks in London.

Kuwaiti entities, including banks, had some Dollars 16.3bn in assets in
international banks at the end of last year, and owed some Dollars 7.5bn,
according to the Bank for International Settlements. Iraq's deposits totalled
Dollars 2.9bn and it owed banks Dollars 7.5bn.

Further UK moves against Iraq, for example, financial and trade sanctions, are
likely to come in line with action by the European Community.

Italy, as the current president of the EC, is likely to call a special meeting
of EC foreign ministers if Iraq shows no sign of withdrawing its forces over the
next 48-72 hours.

Foreign Ministry officials in Italy are still hopeful that the universal
international condemnation of the Iraqi invasion and the growing pressures from
Europe and the US for an end to the occupation will produced the hoped-for
result. If it does not, then it is thought that the Twelve will have to consider
economic and commercial sanctions - despite the apparent failure of their
national controls in recent years to prevent Saddam Hussein from acquiring both
funds and technologies for strengthening his military forces.

Financial sanctions are likely to prove more effective than trade sanctions.
Boycotts against Iraqi or Kuwaiti oil would be difficult to enforce.


                   Copyright 1990 The Financial Times Limited

                             2647 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             August 3, 1990, Friday

Trinidad to charge Moslem rebels with treason


SECTION: SECTION I; American News; Pg. 6

LENGTH: 325 words

THE Trinidad and Tobago Government said yesterday that more than 100 members of
the Moslem sect which had surrendered on Wednesday night, after their failed bid
to overthrow the government, would face capital charges of murder, kidnapping
and treason, Canute James reports from Kingston.

'The Libyan connection has been established,' the government spokesman told a
news conference, without elaborating. Mr Yassin Abu Bakr, leader of the black
Moslem sect, had said before the coup attempt that he had made trips to Libya.
Police had said members of his group were given training there.

Mr Abu Bakr led a group of insurgents who held 42 people hostage for six days in
the parliament building and state television headquarters in Port of Spain, the
capital. He heads a Moslem commune of nearly 1,000 people outside the city.

The Government said at least 30 people, including looters shot by the police,
were killed and some 150 wounded. Police yesterday were expecting to find more
bodies in the parliament building.

Mr Sahadeo Basdeo, Foreign Minister, has asked that soldiers from Barbados,
Jamaica and Antigua - on alert in Barbados in case Trinidad asked for outside
help - remain there.

Trinidad and Tobago's neighbours in the Caribbean Community (Caricom) are
preparing to send supplies of food and medicine.

Trinidad officials said that the rebels' surrender was not the result of any
secret agreements by the Government. Concessions to the rebels, signed by Mr A N
R Robinson, the Prime Minister, while he was held hostage, were made under
duress and so were invalid.

Mr Robinson was still in hospital in Port of Spain, recovering from gunshot
wounds to the leg which he received when the insurgents stormed the parliament
buildings, taking him and other MPs hostage. Mr Leo de Vignes, a junior
minister, died of a heart attack on Wednesday. He had been taken hostage and
shot in the heel on Friday, and released on Saturday.


                   Copyright 1990 The Financial Times Limited

                             2648 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           August 1, 1990, Wednesday

Liberia's agony unlikely to end with Doe's departure


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 1000 words

Michael Holman traces the steady descent of the country into economic chaos and
ethnic conflict

SAMUEL DOE'S tenure as president of Liberia is ending as it began: in violence
that is shocking even on a continent which is painfully aware of the brutality
of civil war.

The Liberia that Mr Doe will leave behind, however, will be significantly worse
off than the country he seized in 1980. The fighting since a small rebel force
invaded the country from the Ivory Coast last December was always likely to
exacerbate tribal divisions. But the slaughter by soldiers of the President's
Krahn tribe of up to 600 civilians last Sunday in a church in the capital
Monrovia may have left a wound from which Liberia may need many years to

The decline of Liberia pre-dates Mr Doe. His predecessor, Mr Williamolbert, was
in many ways a product of his time. Closer links with the Soviet Union, a vision
of co-operation with the states of the region which was never fulfilled, and a
tendency to believe the rhetoric of the Organisation of African Unity,
distracted Mr Tolbert from the economic problems piling up at home:rising oil
prices, higher international interest rates, and falling demand for the
country's two main exports - iron ore and rubber from the vast plantation owned
by Firestone.

As the economy deteriorated, resentment grew over a divide once as important as
ethnicity:an elite which were proud of a lineage that they traced back to 1822,
when freed American slaves landed at a harbour they were to name after US
President James Monroe; and the indigenous Liberians, the majority of the
country's 2.5m people, who felt excluded from office and influence.

In April 1980, Mr Doe, then a semi-literate, 28-year old master sergeant and a
small group of soldiers seized the executive mansion where today he is making
his last stand. They bayonetted Mr Tolbert, doubled the pay of the army and the
civil service, and publicly executed 13 senior members of the former government.

Africa was shocked. Nigeria, host to an OAU summit, refused admission to the
Liberian delegation. But support was at hand from Liberia's traditional
supporter and largest investor:Washington, then especially susceptible to
anxieties about links between African states and the Soviet Union and Libya.

Lured as much by a massive increase in US aid as by the historical ties with
Washington, Mr Doe closed the Libyan mission in Monrovia and cut back on
Moscow's diplomatic presence, cutting relations altogether in 1985.

In return, Liberia received nearly Dollars 500m from the Reagan Administration
in the early 1980s, making it the largest per capita recipient of US aid in
sub-Saharan Africa.

It was to prove a disastrous experience, not only for the US but for the World
Bank and the International Monetary Fund, with both organisations tolerating for
too long - but encouraged by Washington - what they politely termed
'irregularities' in Liberia's conduct of its financial affairs.

The World Bank, frustrated by corruption and local mismanagement, suspended
operations in 1987. The IMF effectively gave up the following year, as Liberia
fell into arrears and showed no signs of implementing any reforms. In March this
year the Fund took the rare step of serving notice on Liberia that unless over
Dollars 300m in arrears were repaid, a process leading to the country's
'compulsory withdrawal' from the organisation would be set in train.

Washington, however, coming under increasing pressure from a Congress alarmed by
Mr Doe's systematic abuse of human rights, made one last effort.

In late 1987 a team of 17 US financial experts arrived with what they thought
amounted to a mandate to assess the state of the economy and to set a reform
process in train.

Within months they had given up in despair, defeated by the resistance of
bureaucrats and politicians.

Helped by hindsights, US diplomats acknowledge that 1985 was a turning point.

Under pressure from Washington, Mr Doe had lifted a ban on political parties in
the preceding year. An election took place in October 1985, marred by
intimidation and ballot rigging; after a delay of two weeks it was announced
that Mr Doe had won the presidential poll with 50.9 per cent of the votes.

It was the last opportunity Liberians were to be given peacefully to extricate
themselves from a dictatorship. Whether closer US monitoring of the process, or
a firm rejection by President Reagan of the validity of the result, would have
made any difference will never be known. Congress denounced the election as
fraudulent and cut off aid; but the Reagan Administration continued its efforts
to make the best of a bad job, acknowledging electoral 'shortcomings', yet
stressing 'positive aspects' and concluding that Mr Doe 'seems to have the
authority to govern.'

With constitutional options ruled out, sporadic coup attempts and a guerrilla
campaign to overthrow Mr Doe became all but inevitable.

On December 24 last year a small rebel force led by Mr Charles Taylor, a former
senior civil servant who had been accused of embezzlement, crossed into
Liberia's Nimba County from the Ivory Coast.

The rag-tag army gathered strength as a brutal government counter-insurgency
campaign waged by soldiers of Mr Doe's Krahn tribe extracted vengeance on the
area's Gio and Mano tribes, accused of supporting the rebels.

By the end of April, Mr Taylor's National Patriotic Front of Liberia had cut the
railway line between the port of Buchanan and the iron ore mining centre of
Yekepa, severing a vital economic artery. By May they were laying siege to the
capital Monrovia, and Mr Doe was preparing to make a last stand at the
presidential mansion.

Further violence seems certain, for there is not only the prospect of a bloody
confrontation with Mr Doe and several hundred loyal soldiers. A split in the
rebel ranks emerged in February, when Prince Yormie Johnson, a senior member of
the original invasion force, accused Mraylor of being a 'criminal and a rogue.'
This raises the danger that the fighting may not end with Doe's departure.


GRAPHIC: Map, no caption; Picture, A Liberian rebel fighter - wearing, as many
guerrillas do, awoman's wig - loads his gun before a battle in Monrovia.

                   Copyright 1990 The Financial Times Limited

                             2649 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 31, 1990, Tuesday

The Chemical Industry 5;
Days of plenty for ethylene



LENGTH: 1097 words

Hilfra Tandy looks at the mainstay of petrochemicals

IMAGINE life without water. Well, that's like imagining the petrochemical
industry without ethylene. Without it, the rest is academic.

Derived from either crude oil or gas, ethylene drives the production of those
more tangible products, like omnipresent plastics (polyethylene and polyvinyl
chloride) and synthetic fibres (nylon and polyester). For nearly eight years the
world's chemical industry has benefited from a combination of sustained world
economic growth and its own, early 1980s, regime of the burn-factor.
Overcapacity - industrial middle aged spread - had set in during the 1970s; by
the early years of the 1980s, it was evident that rationalisation was required
if the industry were to survive.

Truly abysmal performances - even the so-called leaders, such as ICI, BASF, Dow
and Du Pont were losing money hand over fist - forced tough decisions. In
Europe, of the 64 ethylene crackers (plants) that had been in operation at the
beginning of the 1980s, 24 had been shuttered by 1984.

The slimming regime - which knocked out some 30 per cent of the world's total
capacity - worked, and it has continued to work. The international ethylene
industry hit its high towards the end of 1988 when petrochemical profitability
peaked at the highest level ever recorded. But what has happened since? The
low-calorie regime - getting more out of less - has become yesterday's in-thing.
Starved of investment for years, the world's mainstay petrochemical industry
started to fatten itself up. A proliferation of expansions, tuning-ups and
straight binges (ie:new plants) was announced during 1988 and 1989.

True to form, the industry's investment plans only emerged at the top of a
business cycle. The memories of the dark days of overcapacity had prevented
established producers from even contemplating investment in their key feedstock
- ethylene.

At one point - if all those announcements were to be taken at face value - it
really did look as though the ethylene industry across the globe was set to
inflate its capacity from about 1988's 56 to some 75m tonnes by 1992. In just
the US and Western Europe, new ethylene capacity announced amounted to just over
10m tonnes. Add to that plans to build in South East Asia and Japan (circa 6.5m
tonnes), and the running total notched up to some 16.5m tonnes - 30 per cent of
existing worldwide capacity.

Overindulgence? Maybe, if you believed it. The strategy was clear - for
corporate survival, building capacity was the only Darwinian way. Revival =

In Europe during 1988, at least 10 plants were announced, some indicating a
clear change in the way industry was viewing its future. Competitors were
starting to join forces, sharing both the risks and the expected profit. The
combination of Finland's Neste with Belgium's Petrofina - in their Finaneste
joint venture - was the first of such moves, which at the time were regarded as
controversial by the majority of the partners' competitors.

But no sooner had the dust settled on that announcement than a whole host of
other plans emerged. Some seemed, and were, for real, but others were attempts
at pre-empting rivals, or moves to halt others joining the building spree.
Virtually every one of Western Europe's top 10 ethylene producers announced
intentions either to lift existing capacity or to build new plants.

As the building euphoria gave way to a more realistic appraisal of sustaining
good levels of profitability, however, some strategic alliances began to emerge.
West Germany's BASF had announced plans to go it alone and build an ethylene
plant at Antwerp. But just months ago it emerged that BASF had negotiated a
product-sharing deal with Dow, obviating the need for Dow to proceed with its
plan to build a new unit at Terneuzen in the Netherlands. Other producers have
quietly revised plans - pushing back-scheduled commissioning dates. As a
recently published report* on the international ethylene industry noted:'Chances
are that the bulk of of the balance of announced projects will slip quietly in
to the 1994-1996 time-frame.'

In the US and Canada Dow, Phillips, Quantum, Westlake Polymers andaiwan's
Formosa Plastics all announced plant that would be on stream by 1993 - 3.8m
tonnes in total or 15% of 1989's effective capacity. In Japan, six producers or
combinations of the same were jockeying for the green light for new plants. If
that alone were not enough, a few other players had joined the club since the
late 1970s and early 1980s. North African (read Libya) and Middle Eastern
(notably Saudi Arabia and potentially Iraq and Iran) producers had come into the
picture, as hadaiwan, South Korea, Thailand and Indonesia. Many of these
countries were strategically exploiting their own ace cards - namely abundant
supplies of crude oil and gas, available at prices that should ensure a
significant competitive edge against the established developed world's main

Industry Jeremiahs were predicting that projected overcapacity in the ethylene
business would drag the business back into the red. This year was widely
expected to herald a significant downturn in the industry's fortunes - driven by
weaker demand per se and a number of new plants gearing up for commissioning. In
the event, the profitability of the business - while diluted from the heady
levels of just a couple of years back - is still pretty respectable, even
comfortable. On either side of the Atlantic, a series of unscheduled plant
shutdowns and operating hitches have combined to bolster ethylene markets and
help support prices.

In Europe the biggest headache occured at Shell's French unit at Berre, which
has been out of action since this March and is not due back on-stream until next
month. Planned and unplanned outages at numerous other plants throughout Europe
have, none too surprisingly, led to the reverse of the predicted pricing
pressures. Similarly in the US, unplanned shutdowns at the second largest
producers' plants - Dow's - have arrested any dramatic erosion of prices levels.
This strengthening has been aided by operational problems in at least five other
plants run by Texaco, Exxon, Oxychem, Quantum and Shell.

So, while the industry is not enjoying the great profits of 1988 and 1989, the
sky has not fallen in on it. Fears that the industry will repeat the
overbuilding follies of the late 1970s / early 1980s have receded - for the
moment at least.

* World Cracker Report - a comprehensive review of the internation olefins
industry (1980-1992), published by World Petrochemical Analysis Ltd, February


GRAPHIC: Picture, The very image of a modern chemical plant, huge pipes gleamat
a sulphuric acid plant in BASF's Ludwigshafen works in West Germany

                   Copyright 1990 The Financial Times Limited

                             2650 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 31, 1990, Tuesday

Sect's crusade against 'corruption' will leave deep scars


SECTION: SECTION I; American News; Pg. 6

LENGTH: 880 words

Canute James on economic and political repercussions of the Caribbean coup

A government plan to build a monument to honour a civil servant, and a court
ruling last week on land ownership were among the seemingly innocuous factors
which led to the botched and bloody attempt by Moslems to take over Trinidad and

The Jamaat al Muslimeen, a commune of less than 1,000 members out of the
islands' population of 1.2m, had been in frequent conflict with the authorities
over its links with Libya and alleged involvement in narcotics.

'I have been to Libya several times, and I am a friend of Colonel Gadaffi (the
Libyan leader),' Mr Yassin Abu Bakr, the leader of the sect, said at the height
of the political crisis started when he took hostage the country's prime
minister and several other parliamentarians. 'We are Moslems, and Libya is a
Moslem country. We have also had support from Saudi Arabia.'

Yet there is little evidence to back suggestions that a Libyan, or any other
foreign hand, was behind the attempted coup. Mr Abu Bakr, a former police
officer in his early 40s who started the commune 10 years ago, speaks of having
acted for the 'moral cleansing' of Trinidad andobago, which he claimed had been
overrun by corruption, racism and poverty.

Mr Arthur Robinson, the Prime Minister and object of Mr Abu Bakr's anger, last
week proposed in parliament the erection of a monument, costing TTDollars
500,000 (USDollars 117,000), to honour a late civil servant who stood against
corruption by former government officials.

'Is this the kind if society we want to continue to live in?' asked Mr Abu Bakr
on Friday night after staging the attempted coup. 'There is no medicine in the
hospitals and the prime minister allocates half a million dollars for a concrete

Earlier this year the sect received a gift of pharmaceuticals from abroad, but
the shipment was seized by the Government. It was later handed over to the group
which became incensed, not at the seizure but at a government refusal to accept
it for use in the public health service.

A further setback for the sect came last week with a court ruling that land they
had been occupying outside Port of Spain, the capital, belonged to the

There have also been frequent confrontation between the police and Mr Abu Bakr's
followers over narcotics. The police claimed to have found drugs on the sect's
premises, but the Moslems countered that the narcotics were seized from
traffickers and users during their own efforts to curb abuse.

While there is little to support the Moslems' claim that the attempted coup had
national support, it set off a train of events which will leave deep political
and economic scars on the English-speaking Caribbean republic.

Most Trinidadians have only distant memories of the last coup, staged
unsuccessfully 20 years ago by Black Power militants.

In 1979 the Government in Grenada, Trinidad and Tobago's neighbour, was
overthrown by leftists, setting off a chain which led to an American military
invasion four years later.

With these events in mind, some regional leaders, meeting in Kingston this week
for the annual summit of the Caribbean Community, are suggesting greater
co-operation in security matters and the possible creation of a strike force to
protect elected governments. But they balk at suggestions that the region is
becoming a zone of instability.

Regardless of the outcome of the crisis in Trinidad and Tobago, the country will
pay a heavy economic price. Port of Spain and several other towns have been hit
by a sustained wave of looting and arson which has already caused million of
dollars worth of damage.

The security forces have been stretched in dealing with the lawlessness, as men
and arms are concentrated on the parliament buildings and the state-owned
television station where the hostages are being held.

Assistance in curbing public disorder, not in helping to free Mr Robinson and
his colleagues, is what the Jamaican Government had in mind when it sent a
contingent of troops to neighbouring Barbados yesterday to be at hand should
Trinidadians request help.

Although Mr Abu Bakr may not have anything like the level of support which he
claims, many Trinidadians were unhappy about Mr Robinson's handling of the

He took office in 1986 at the head of a coalition which scored a handsome
electoral victory to end three decades of government by a single party.

But he inherited an economy shattered by a slump in the oil price, on which the
country depends for more than two-thirds of its revenues. Despite structural
adjustment pacts with the International Monetary Fund, economic austerity and
currency devaluations, backed by other multilateral and bilateral financial
help, the economy has been performing only marginally better.

Recent public opinion polls suggest the administration is losing support just
over a year before an election is due.

Trinidadians are hardly likely to forget Mr Abu Bakr quickly. But when the
insurrection started many did not take it seriously.

On Friday evening, while the Moslems were holding a gun to the head of the
nation, several thousand Trinidadians went to their national stadium to cheer
their team in the playoffs for the regional soccer championship. In the event,
Trinidad and Jamaica played to a goal-less draw.


                   Copyright 1990 The Financial Times Limited

                             2651 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 30, 1990, Monday

Rebels set conditions for release of Trinidad Premier


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 436 words

LEADERS of a black Moslem sect in Trinidad yesterday set further conditions for
releasing Mr Arthur Robinson, the Prime Minister, and other parliamentarians
being held hostage in the capital, Port-of-Spain, writes Canute James.

Church leaders trying to negotiate an end to the crisis said Mr Yasin Abu Bakr
and his followers wanted immunity from arrest and charges over the coup they
attempted on Friday night.

According to an earlier report police made an abortive attempt to storm the
parliament building where the hostages were being held. The Caribbean News
Agency said small arms and artillery were used.

But other reports last night suggested that negotiations were going on, with
some hope of a deal being struck.

Mr Abu Bakr, a former police officer, has warned that any armed intervention
would jeopardise hostages' lives.

Mr Robinson was reported to have been shot in the leg when he refused to read
out an order to the police, written by his captors, that there should be no
intervention. Reports that he and other parliamentarians had been wired to
explosives have not been confirmed. The agreement being worked out by church
leaders, suggested that Mr Robinson would step down and hand over to Mr Winston
Dookeran, a cabinet minister, who would call elections in 90 days in the
English-speaking Caribbean republic of 1.2m people.

Under the deal, the black Moslems would be allowed to fly to Libya, to which the
group is linked. However, Mr Abu Bakr said yesterday he had no intention of
leaving Trinidad. He said he had staged the attempted coup to deal with
corruption, racism and poverty. At least 22 people have been killed since the
insurrection broke out. The heart of Port-of-Spain has been devastated by
looting and fires, and a lengthy curfew imposed.

Hundreds of looters yesterday ransacked shops and factories in the capital,
carrying off carloads of food, TV sets and refrigerators.

Mr Abu Bakr's commune has fewer than 1,000 members and has little support within
the tiny Moslem minority in the country. Last week the commune lost a court case
in which it was claiming legal occupation of government-owned land. Trinidad and
Tobago's neighbours condemned the coup attempt and voiced support for Mr
Robinson, who should have been meeting fellow leaders in Kingston, Jamaica, this
week for the annual summit of the Caribbean Economic Community.

Mr Erskine Sandiford, Prime Minister of Barbados, and Mr P J Patterson, acting
Prime Minister of Jamaica, said their armies had been placed on alert but they
would not intervene unless invited to do so by therinidad Government.


                   Copyright 1990 The Financial Times Limited

                             2652 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 28, 1990, Saturday

Premier held hostage in Trinidad coup


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 347 words

The Government of Trinidad and Tobago was overthrown early today in a coup by a
small Moslem group which was holding the Prime Minister hostage, writes Canute
James in Kingston.

The Premier, Mr Arthur Robinson, was held with several cabinet ministers and
opposition members.

Yasin Abu Bakr, leader of the Moslem group, which has links with Libya, claimed
on television he had taken charge of the Caribbean nation of 1.2m people.

The coup began when the police headquarters in Port-of-Spain, the capital, was
set on fire. The parliament buildings were then attacked while legislators were
debating allegations of corruption among government officials.

Diplomats in Port-of-Spain said it appeared no one had been hurt in the attack
on the parliament buildings. They expected the new government to be toppled once
the army moved in but said the army was cautious because of concern for the

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                   Copyright 1990 The Financial Times Limited

                             2653 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 27, 1990, Friday

Diplomatic realignments



LENGTH: 1084 words

Victor Mallet discusses foreign relations

THESE ARE trying times for Tunisian diplomats. The drive for improved relations
with other Arab states undertaken by President Zine El Abidine Ben Ali since
1987 has begun to give way to a defensive unease about developments in Algeria
and Libya, Tunisia's powerful and only land neighbours.

In such circumstances, it is hardly surprising that Tunisia, North Africa's
smallest country, has embarked on the latest of a long series of delicate
diplomatic realignments, focusing attention once again on its western friends in
America and Europe to counterbalance the uncertain loyalties of the Arab

Hence President Ben Ali's recent trips to the US and Italy and his planned visit
to Germany. Yet, just as Tunisian officials are expressing concern about the
rise of Islamic fundamentalism in Algeria and the unpredictable leadership of
Colonel Muammer Gadaffi in Libya, they perceive simultaneous and equally
disturbing changes in Europe.

With the approach of the single European market in 1992, Tunisians believe, the
European Community is holding out a welcoming hand to the newly democratic
states of eastern Europe and the non-EC countries of the European Free Trade
Area, while all but ignoring its trading partners on the southern and eastern
shores of the Mediterranean. Europe, in short, is turning in on itself, and
America is far away.

The Tunisian government feels it can ill afford to be relegated to the periphery
of European consciousness. It needs money to help reform the economy and
confront the challenge of Islamic fundamentalism from a position of economic

Although Mr Ben Ali's ruling party is considerably more robust than its Algerian
counterpart, there is a widespread fear among the Tunisian bourgeoisie that the
fundamentalist 'infection' will spread across North Africa after the victory of
the Islamic Salvation Front in last month's Algerian local elections.

The rest of the Arab world has little to offer in the way of comfort, and its
traditional rulers remain wary of the military background of leaders like
President Ben Ali, a general. One of his first acts of foreign policy, after
taking power in 1987, was to visit Mecca and pay a visit to King Fahd of Saudi
Arabia; but the kingdom is thought to give financial support to the Nahda
(Renaissance) movement, theunisian Islamic group, and King Fahd has warmly
received its leader Mr Rached Ghannouchi.

The enthusiasm among the other Gulf states for investment in Tunisia has waned,
and the Arab League is returning home to Cairo following Egypt's diplomatic
rehabilitation, leaving a palatial headquarters building - still under
construction - to the handful of specialised Arab League agencies which will
remain in Tunis.

As for Libya, relations are not exceptionally bad compared with what was nearly
a state of war in 1985; but nor are they particularly easy when set against the
euphoria of rapprochement in 1988. The idiosyncratic Col Gadaffi has recently
become more interested in his new-found relationship with Egypt than in ties
with Tunisia, and the Libyan leadership is so unstructured that the Tunisians
have a hard time finding anyone to put their various bilateral agreements into

The great boom for the merchants of Sfax is over - Tunisian officials say that
55 per cent of the Libyan population has crossed the border, mostly years - but
the trade continues at a lower level. A joint exploration company has been
established to look for offshore oil and gas (although it has been slow to get
moving), and Libya has restored frozen Tunisian assets, compensated many of the
30,000 expelledunisian workers, and allowed such workers in again.

In 1989, North African leaders established the Arab Maghreb Union (AMU), an
attempt to co-opt Libya, promote economic co-operation and present a united
front to Europe. The AMU, consisting of Algeria, Libya, Mauritania, Morocco and
Tunisia, has yet to prove its worth - indeed, those travellers able to take
advantage of special airport immigration facilities for Maghreb passport holders
are said to be treated with more suspicion than any other category - but there
is no doubting the importance of the European issue.

Tunisia conducts three quarters of its trade with the EC and officially accounts
for some 400,000 of the 5m Maghreb migrant workers in Europe. It has a special
affinity with France, the former colonial power, and close ties with nearby
Italy, not to mention an important economic relationship with Germany and an
increasing interest in Britain.unisia looks north for much of its culture, and
the satellite dishes of Tunis pick up a range of European television channels.
Tunisians fear that this European relationship, instead of being strengthened,
is now threatened.

Wrangling continues over trade access for Maghreb goods to Europe, and by the
end of this year Tunisia will have to renegotiate preferential tariffs for its
olive-oil exports and ensure free access for its textiles in the face of
opposition from Portugal.

European countries are introducing visa requirements to keep out unwanted North
Africans, instead of investing more money in the Maghreb to make its economies
viable and increase local employment, Tunisian officials say; while European
politicians, notably the French extremist Mr Jean-Marie le Pen, have fuelled the
fires of anti-Arab racial feeling, instead of emphasising the culture the two
sides have in common.

'Some of the Maghreb countries are more integrated with Europe than some of the
countries in Europe,' says one senior Tunisian official. 'Yet one feels on a
slippery slope, with talk of 'boat people' and apocalyptic fears about the
southern Mediterranean instead of the east bloc . . . There is a risk of a
'spirit of the crusades' between Europe and the Maghreb.'

Both the EC Commission and the Tunisian foreign ministry have drawn up a range
of proposals - focusing on EC financial assistance - for reinforcing the vital
EC-Maghreb relationship; but implementation seems considerably more urgent from
Tunis, which is looking anxiously at its unpredictable neighbours, than it does
from Brussels.

The country has a special affinity with France and close ties with Italy

There is a widespread fear that the Moslem fundamentalist 'infection' will

European countries are introducing visa requirements to keep out unwanted North
Africans, instead of investing more money in the Maghreb to make its economies
viable and increase local employment


GRAPHIC: Picture, President Ben Ali, drive for improved relations with otherArab

                   Copyright 1990 The Financial Times Limited

                             2654 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 27, 1990, Friday

Tunisia 2;
An unofficial safety valve



LENGTH: 1049 words

Francis Ghiles investigates the flourishing informal economy

THE INFORMAL sector of the Tunisian economy is flourishing. A visitor has only
to compare the number of building sites with official statistics of new housing
units, to realise that official figures do insufficient justice to the ingenuity
of the average Tunisian who, whether or not his declared income allows him to do
so, is extending or building his house.

Since 1986, when a balance of payments crisis due to the decline in the price of
oil and state overspending forced Tunisia to restructure its economy, the
purchasing power of the majority of 7.5m Tunisians has declined by about 20 per

There have been no serious social disturbances, however, and this cannot simply
be due to the etat de grace President Zine El Abidine Ben Ali has enjoyed since
he came to power in November 1987.

The informal, unregulated sector of the economy is an important generator of
household income. It also offers a safety valve when economic times are hard.
The food vendors using pushcarts, housewives subcontracting to the textile
industry, and small factories making better quality bricks at a fraction of the
cost of more modern units and without any subsidised loans - all these are

At a micro-economic level, the employer does not have to pay tax, social
security or a minimum wage. He can shed labour when the going gets rough. On the
macro-economic level, competitive capital and labour markets ensure low costs in
contrast to the 'modern' sector where capital is subsidised and labour submitted
to heavy payroll taxes. Government projects in Tunisia have tended to encourage
capital intensive undertakings, whereas the informal economy is a result of
people responding to the failures of the state by creating their own economy.

It is possible that as much as one quarter of the Tunisian economy is
unaccounted for in official GDP statistics. Out of 750,000 rural women who are
old enough to work, nearly 200,000 are in the labour force, a further 45,000 are
counted as agricultural labourers. However, some observers believe as many as
600,000 or 80 per cent of rural women have activities which range from tending
sheep to weaving, a figure which, if true, would add 14 per cent to the labour
force as a whole. Unregistered activity might thus add 15 per cent to
agricultural production, a figure which translates into an additional 2.5-3 per
cent of GDP. These women might each be earning between TD600-700 a year. So
strong are government objections to this subject, which is often taken as
meaning 'smuggling' or 'black marketeering', that a World Bank report written in
1985 was never published.

In construction, textiles and leather, stories abound which show the importance
of informal work. The city of Sfax, for instance, has no tradition of
shoe-making. Now it has become a centre where children on their way home from
school often collect the leather pieces needed to make shoes. After dinner, the
family gets down to making shoes which are delivered the next morning on the way
to school. Accounts are settled on the eve of religious feasts - not a scrap of
paper has been exchanged, nor has a bank become involved. The Agence de
Promotion de l'Industrie has a bloated workforce desperately trying to locate
'new' projects, but the youngsters of Sfax have never heard of it.

The building sector can boast of even more significant developments. In the few
years that followed the end of the attempt at full-blooded socialism, two or
three years of bountiful crops gave people cash to spend, but building materials
were very difficult to obtain. Mr Moktar Zarrouck built a small brick factory,
using traditional methods and with no help from the state. By 1985, when there
was a slump, he owned five factories but the price of construction materials was
still controlled by the state in spite of a 10-year effort by the World Bank to
persuade the authorities to give up price-fixing.

Mr Zarrouck defied the state, cut his prices by 20 per cent and sent out his
fleet of lorries to every town and village in the country to market the bricks
he produced, allowing his drivers leeway about the selling price.

In spite of the fact that his move sparked fierce opposition from the employers'
federation, Utica, and that two state brick-making companies nearly went
bankrupt, the authorities capitulated and allowed a free market in building

Something similar happened to factories established with considerable grants
from the state to manufacture prefabricated units. The factories went bankrupt
in the face of competition from a smaller, better-run unit set up by a Tunisian
who had learned his trade in France. His company, AZIM, unlike the large
subsidised units, paid back the banks in full.

Jobs are created informally because they cost a fraction of what is needed to
set someone up in the modern industrial sector, TD270 as against TD33,700 (1985
estimates). The average cost of labour inunisia is less than a third of that of
the 'modern' sector while the value added per worker is worth about 50 per cent
of that in more up-to-date factories. The informal sector provides an estimated
75 per cent of all apprenticeships. It substitutes locally-made goods for
expensive or scarce imports. It responds quickly to demand as happened after the
opening of the frontier with Libya when Sfax traders discovered their southern
brothers were desperate for mousetraps. It is pervasive because it is easier to
have your phone repaired by a travelling mechanic, and easier to start building
after bribing the building inspector so as to avoid the maze of red tape needed
to gain the permit.

Assuming that the informal sector provides 20-25 per cent more jobs than is
officially admitted, one could conclude that in 1986 2.21munisians held jobs out
of a labour force of 2.5m rather than 1.79m out of a force of 2.1m. More
importantly, these activities do not just provide a safety valve at a time of
declining income; they can be cost efficient, dynamic and adept at developing
new technology with little or no government support.

It is possible that as much as one quarter of the Tunisian economy is
unaccounted for in official GDP statistics

The informal, unregulated sector of the Tunisian economy is an important
generator of household income


GRAPHIC: Picture, Jasmine-seller

                   Copyright 1990 The Financial Times Limited

                             2655 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 27, 1990, Friday

Tunisia 3;
Better image needed - A critical look at tourism



LENGTH: 886 words

TOURISM remains, more than ever before, a mainstay of the Tunisian economy.

The decline in foreign visitors - numbers dropped by 7.1 per cent last year to
3.2m - and receipts, which declined by 21.3 per cent toD855m, are attributable
to the reduction in the number of visitors from Libya rather than from western
Europe. Despite this downturn, the contribution of tourism to the balance of
payments continues to be larger than any other sector of the economy.
Furthermore, tourism employs more than 40,000 Tunisians and spawns nearly four
times as many jobs in farming, transport and construction. Overall, it
contributes 4.2 per cent to the Gross Domestic Product. Indeed, it can be argued
that the avowed wish of the Tunisian authorities to get the number of beds
nearly doubled, from the present 115,000 to 200,000 by 2000, is an economic

The purists may object to more developments on the coastline, but the country
still boasts many miles of beaches, around Hergla for instance, north of Sousse
and on the island of Jerba, which are ideally situated for hotels.

The state has sold virtually every hotel it owns in Tunisia. A class of real
entrepreneurs has emerged, among them Mr Aziz Miled and Mr Mohammed Driss, who
are prominent among those who manage many thousands of beds. Others, such as Mr
Hosni Djemmali, have branched out to buying and building hotels in Morocco.

Tunisia is a market for bulk, low-cost holidays, organised by a few leading
operators, otherwise known as 'feeders' in France, Germany and the United
Kingdom. Going up-market will be difficult.

Many hotel owners in Tunisia have grown rich quickly, by buying hotels from the
state or by building new ones. Unfortunately too many hoteliers are reluctant to
improve service, which is often poor, by reinvesting a share of their profits.
The standard of buildings and equipment is good but the food is mediocre.

Equally important is the apparent lack of concern of town councils for the
environment. They do not appear to be aware of the need for proper pavements,
for more trees or for improved cleanliness. Ugly new buildings are defacing many
old and new towns. Even more worrying is the lack of awareness of the need to
preserve such ancient archaeological sites as Carthage, which is also the smart
residential suburb of Tunis. Land speculators and wealthy Tunisians show
contempt for traditional architecture. In nearby Sidi Bou Said, one of the most
famous beauty spots on the Mediterranean, ugly new villas owned by senior
members of the establishment continue to rise. Equally, if the authorities do
not make a greater effort to save parts of the old Medina of Tunis, future
attempts to add a cultural dimension to tourism will be doomed.

However, efforts are under way to develop a new resort on Tunisia's northern
shore in Tabarka and to encourage visitors to spend a few days in the Sahara
Desert, a region which offers unique scenery. The project to develop Tabarka, a
small, sleepy French provincial-style port near the Algerian frontier, is bold.
It involves essentially state-funded building of hotels with 10,000 beds and
will offer a spectacular golf course, diving and sailing. The cork oak covered
hills which dominate the resort should attract ramblers and wild boar hunters.
An international airport is being built, roads and water supply upgraded.
However, finding enough staff for all these developments will not be easy - the
region boasts no tradition of service at all. The danger exists of an
over-ambitious state-financed resort in what remains a backward region.

Further south, Iberotel and a private Tunisian company recently opened an
attractive hotel in Douz, allowing visitors on the coast to travel to the desert
for a few days. During the drought of 1988-89, work on that hotel turned out to
be the lifeline for what remains a very underprivileged area. More ambitious
luxury schemes are also being planned. Ritz Carlton is discussing the idea of a
12,000-bed resort in the Kerkennah islands, east of the port of Sfax, while the
UK Brent Walker Group and Kuwaiti investors are revamping the former Baie des
Singes hotel on the coast north of Tunis.

Although Hilton and Meridien have hotels in Tunis and Sheraton has a good
establishment in Hammamet, international names specialising in hotels for
businessmen are absent. In the early 1980s, Trust House Forte tried in Port El
Kantaoui, but gave up. Ciga and Intercontinental are not present and any change
in policy looks unlikely. Club Mediterranee is represented and is adding to its
investment. The development of the Tunisian tourist industry has, over the
years, been impressive. In 1962, there were only 000 beds in North Africa's
hotels; now there are 115,000. In this period, tourism has become a pillar of
the economy.

While efforts are being made to improve amenities in the many Roman sites and to
clean up some of the towns at the centre of the tourist industry, many Tunisians
seem to think that most foreigners visiting their country are incapable of any
activity beyond sunbathing and swimming. As a result they are destroying the
country's rich cultural heritage. For instance, in Bizerta and Tabarka new
apartment blocks are spoiling the visual quality of these old seaports which
could attract tourists.


                   Copyright 1990 The Financial Times Limited

                             2656 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 27, 1990, Friday

Tunisia 3;
Incentives prove successful - Energy consumption will soon overtake oil
production, but . . .



LENGTH: 753 words

TUNISIA MAY envy the hydrocarbon wealth of neighbouring Libya and Algeria, but
it has managed to postpone repeatedly the day when it will become a net importer
of oil.

Rising domestic energy consumption seems certain to overtake the modest output
of Tunisia's ageing oilfields - by the middle of the decade, according to the
latest estimates - but, in the meantime, the authorities are deploying a range
of financial incentives to encourage further exploration and development by
international companies.

The policy appears to be working. Since the oil-price crash in 1986, only about
10 exploration wells a year have been drilled in Tunisia, a third of the number
recorded in the early 1980s; but this year the 23 foreign oil and gas companies
in the country are expected to drill 16 wells. After five years' decline, oil
production rose slightly to 4.94m tonnes in 1989.

Legislation to promote exploration was introduced in 1985 and 1987. Faster
cost-recovery and royalties starting as low as 2 per cent were aimed in
particular at promoting the development of small and medium-sized fields which
had been discovered but not exploited in the preceding 15 years. 'There are
quite a few small reserves, which were frozen for years and which are now being
developed,' says Mr Abdelwaheb Kesraoui, head of Entreprise Tunisienne
d'Activites Petrolieres (ETAP), the state oil company.

Additional incentive legislation has been adopted this year. It includes
provisions which can allow costs of new exploration to be offset against the
profits of production from another concession, thus encouraging oil firms to
take on more than one operation in Tunisia.

Tunisia's two main oilfields, El Borma and Ashtart, are old and in decline,
making the development of new fields all the more urgent. The most important
concession due to come on-stream is the Marathon/Etap Ezzaouia field, in Zarzis,
which should begin production this year and eventually account for as much as a
fifth of Tunisian output. It is the first significant find for more than a

Oil companies are meanwhile hoping for contracts from Tunisia's joint company
with Libya, formed to explore their shared continental shelf, although American
companies will probably be unable to take part because of the dispute between
Washington and Tripoli.

By the end of 1990 British Gas (BG) expects to decide whether to develop the
offshore Miskar gas field. BG, currently with 80 per cent of the project against
Etap's 20 per cent, is due to finish tests on a sixth well in the field this
month. Reserves are thought to be substantial - about 800bn cubic feet in
several reservoir layers - but the quality of the gas is poor. Only about 65 per
cent of the gas is methane, with the rest made up largely of carbon dioxide and
nitrogen. In addition to a pipeline to shore, a costly processing plant would
therefore be required to treat the gas. The whole project could cost Dollars
500m or more.

Gas from Miskar would be used largely for Tunisian power stations, and the
Government is anxious for the project to proceed, not least because the output
of associated gas from El Borma is falling steadily. BG, which also produces oil
in Tunisia, hopes to produce Miskar gas by the first quarter of 1994 if it
decides to go ahead.

Mr Kasraoui emphasises the importance of Tunisia's efforts to promote the
exploitation of gas. 'We realised that companies coming to explore in Tunisia
weren't really interested in gas, except in the case of very large deposits,' he
says. Tunisia now buys gas at 85 per cent of the price of the equivalent amount
of high-sulphur fuel oil.

Tunisia's gas programme includes plans to extend the pipeline network from
Sousse to Sfax. The country already takes some of its gas from Sonatrach of
Algeria, drawing it from the trans-Tunisia pipeline carrying Algerian gas to

The Tunisian state-controlled phosphate industry suffers from the same sort of
geological misfortune as its oil:deposits are scattered and often difficult to
process. Of its 6.5m tonnes of annual production,unisia exports between 1.2m and
1.5m tonnes of the best quality phosphates, and converts the poorer grades into
fertilisers and phosphoric acid in its own factories.

Weak world prices and a cumbersome administration contributed to accumulated
losses of some Dollars 400m for the industry as a whole up to the end of 1989,
but a restructuring programme overseen by the Commission d'Assainissement des
Entreprises Publiques is under way.


                   Copyright 1990 The Financial Times Limited

                             2657 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 26, 1990, Thursday

Bahrain banking group in share offering

BYLINE: STEPHEN FIDLER, Euromarkets Correspondent

SECTION: SECTION I; International Capital Markets; Pg. 28

LENGTH: 128 words

OUTSIDE shareholders subscribed Dollars 300m to an offering of shares by Arab
Banking Corporation, the Bahrain-based international banking group, the bank's
chairman said yesterday.

Mr Abdulla Saudi said that, as provided for in the offer document, two existing
shareholders - the Governments of Kuwait and Libya - would take a further
Dollars 50m of the shares. The two Governments would have taken a further
Dollars 50m if necessary.

The bank's third shareholder is the government of Abu Dhabi, which made no offer
to enlarge the number of shares it holds. The Dollars 350m offering was the only
international share offering yet to have been launched by an Arab company.

Mr Saudi said some 3,600 shareholders had been added to the company share


                   Copyright 1990 The Financial Times Limited

                             2658 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 26, 1990, Thursday

Opec heads towards price increase


SECTION: SECTION I; UK Company News; Pg. 30

LENGTH: 379 words

OPEC WAS last night heading towards an agreement that would lift its reference
price to Dollars 20 a barrel or more.

The move to raise the price above the current Dollars 18 a barrel follows a
strident call by Iraq for the Organisation of Petroleum Exporting Countries to
raise the reference level to Dollars 25 a barrel and threats against fellow Opec
members Kuwait and the United Arab Emirates, both of which have consistently
ignored their production quota limits.

Opec oil prices were just Dollars 14 a barrel during June and are about Dollars
17.50 today.

'It is my understanding that everybody is agreed to Dollars 20,' said Mr
Gholamreza Aghazadeh, the Iranian Minister, at the meeting in Geneva. However he
said that some countries wanted to lift prices even higher.

Mr Hisham Nazer, the Saudi Minister, said he would support an increase in the
reference price, although he did not say where it should be set.he Saudis are
understood to be attempting to fashion a compromise position to bridge the gap
between the price hawks, Iraq and Libya, and the more moderate Opec members.

Iraq was understood to be uncompromising in its call for Dollars 25 oil. This
figure is much higher than most other Opec members will accept and Mr Rasheed
Salem al-Ameeri, the Kuwaiti Minister, called it 'unreasonable.'

Lifting of the reference price is unlikely to have any immediate impact on the
market, where prices are determined on the basis of perceptions of supply and
demand. However, a high reference price could condition future debate within
Opec over whether or not to lift the Opec production ceiling.

A consensus has been reached to set the ceiling at 22.5m b/d coming out of the
meeting, but some members would like to see this lifted in the fourth quarter if
market conditions warrant it.

Dr Subroto, the Opec secretary general, said that the call on current Opec oil
production plus stocks would average 23m b/d in the second half of the year,
rising from 21.78m b/d in the second quarter to 24.43m b/d in the fourth
quarter. Opec would have to restrict production to just 22m b/d in order to
eliminate a 184m barrel stock build which occured in the first half of the year.
Production at 22.5m b/d would eliminate half of the stock overhang, he said.


                   Copyright 1990 The Financial Times Limited

                             2659 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 25, 1990, Wednesday

Maghreb states seek to strengthen ties with EC


SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 330 words

THE FIVE Maghreb countries of North Africa have undertaken to speed up economic
integration between them and called for stronger ties with the European
Community. The move is clearly designed to prevent them from being squeezed out
of the single European market after 1992.

A final declaration issued after a summit in Algiers of the leaders of Algeria,
Tunisia, Morocco, Libya and Mauritania, which ended on Monday, said that 1995
had been set as the target of a customs union between the five countries. It was
also decided to create a common airline.

Five agreements were signed in Algiers covering trade in agricultural products,
the prevention of agricultural diseases (locusts and screw worm notably), the
encouragement and guarantee of investments, the ending of double taxation laws
and free movement of goods and people.

At the moment, Maghreb countries, which have a total population of 65m and a
combined GNP of more than Dollars 100bn (Pounds 55bn), conduct only about 1.5
per cent of their official external trade with one another.

The collapse of communist regimes in eastern Europe and the growing links being
forged between these countries and the EC was unwelcome news in North African
capitals. The three central Maghreb states, Algeria, Tunisia and Morocco,
conduct about two-thirds - in the case of Tunisia three-quarters - of their
trade with EC countries, to which they owe much of their debt and trade credits.

President Chadli Bendjedid of Algeria, who was hosting the summit, underlined
the 'close ties with the European Community' all countries in the region already
enjoyed and which they wished 'to reinforce and expand to make the two sides of
the Mediterranean a model of North South relations'.

The five countries, which formed the Maghreb Arab Union in February 1989, are
due to hold joint ministerial talks with the EC in November.hey clearly hope
that forming a customs union will put them in a stronger position to negotiate.


                   Copyright 1990 The Financial Times Limited

                             2660 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 25, 1990, Wednesday

Iraqi sabre-rattling sets scene for Opec talks


SECTION: SECTION I; Commodities & Agriculture; Pg. 30

LENGTH: 1289 words

Steven Butler and Victor Mallet on the growing pressure for higher oil prices

THE OPEC ministerial meeting in Geneva this week will be the first test of
whether Iraq can achieve its aims by threatening its small but oil-rich
neighbour, Kuwait.

Iraq, unlike Kuwait, wants higher oil prices. The ministers attending the
half-yearly Organisation of Petroleum Exporting Countries conference will have
to decide whether to keep, or increase, the current Dollars 18-a-barrel
reference price for a basket of Opec crudes.

The very fact that this issue tops the agenda is a result of Iraqi
sabre-rattling. And the knowledge that Iraqi troops have marched up to the
disputed Kuwait border will haunt the meeting, which opens formally tomorrow
following today's committee meetings.

It also raises a broader question: will the balance of power within Opec shift
fundamentally in favour of the price hawks, leading to a period of higher oil

'The political balance has been significantly altered already,' says Mr Mehdi
Varzi, oil analyst at Kleinwort Benson.

Mr Varzi has long predicted higher oil prices because of steadily rising demand
and the increasing dependence of the world on supplies from the Middle East. He
now believes that Opec will adhere to a 22.5m barrels-a-day production ceiling
to be adopted at the meeting, and that excess stocks will be drained away in the
third quarter, leading to a rally by the year end.

Mr John Toalster, a well-known bear at Hoare Govett, has changed his view. He
believes that while the supply and demand fundamentals still imply a weak
market, oil prices are likely to rise because of Iraqi pressure on its Gulf
neighbours. He does not believe that Iraqi President Saddam Hussein, having
tasted success, will back off in the near future.

It was persistent overproduction by Kuwait and the United Arab Emirates that
caused oil prices to collapse in the spring, as world stock levels hit 8-year
highs. But Iraqi threats are now forcing Kuwait and the UAE to rein back
production and Brent oil prices have shot up nearly Dollars 4 a barrel this
month. Iraq has been cheered on by its erstwhile enemy Iran as well as other oil
producers from all over the globe.

Mr Varzi expects the pressure to continue: 'Iraq is on a winning wicket. It
cannot lose. It will just let Kuwait sweat.'

Last week's threats did not come out of the blue. At the Arab summit in Baghdad
in May, Mr Saddam complained that quota-busters and low oil prices were causing
unendurable pressure.

'This is in fact a kind of war against Iraq,' he told a closed session of the
summit on May 30 in a speech released a week ago by Iraqi radio. But prices
continued falling, and in June the price of the Opec basket languished around
Dollars 14 a barrel.

Iraq, which depends almost exclusively on oil exports for foreign exchange
earnings, needs revenue quickly. President Saddam is trying to rebuild the
economy after the Gulf war, while funding weapons research and development and
keeping foreign creditors at bay.

Mr Saddam and his ministers, however, have betrayed much broader financial and
political aims than just strengthening oil prices.

Iraq has revived its border dispute with Kuwait, and demanded the return of
Dollars 2.4bn in oil 'stolen' by the Kuwaitis from an oil field near the
frontier. It has insisted that an estimated Dollars 35bn in loans to Iraq made
by Kuwait, Saudi Arabia and other Gulf states during the Gulf war be written

Yesterday Kuwaiti and Western officials confirmed that Iraq had moved troops
towards the Kuwaiti border in recent days.

Kuwait, the oil policy of which is determined by Sheik Jaber al-Ahmad al-Sabah,
the Emir, sees much of this as an Iraqi attempt to extort money from the wealthy
yet militarily weak and underpopulated Gulf states to the south.

Iraq, portraying itself as the defender of the Arabs against the Iranian
revolutionary menace during the Gulf war, is now demanding its reward. Mr Tareq
Aziz, the Iraqi Foreign Minister, asked in his memorandum to the Arab
League:'Does not the logic of regional security make it incumbent on these
(Gulf) states not only to cancel these debts but also to organise an Arab plan
similar to the Marshall Plan to compensate Iraq for some of the losses during
the war?'

Yesterday few analysts believed that Iraq, which once claimed all of Kuwait's
territory, would invade the country. But an invasion cannot be ruled out
entirely, and this is what makes the Iraqi tactics so effective.

Mr Saddam, likened by Arabs to the late Gamal Abdul Nasser of Egypt, wants to
project himself as the leader of the Arab world, reflecting Iraq's military
might, its 18m population and its historical glory.

In his efforts to achieve his ambitions he is becoming a political hawk as well
as an oil price hawk, repeatedly threatening Israel, encouraging intransigence
on the part of the Palestine Liberation Organisation and portraying himself as
the champion of the Arabs in a war against American influence.

On the oil front he has suggested that the US build-up of a strategic petroleum
stockpile is part of a conspiracy to keep prices low by manipulating the market,
and he has implicated Kuwait and the UAE in the plot.

Such tactless accusations, and his broader claim that 'the policies of some Arab
rulers are American,' are causing intense concern in Saudi Arabia as well as in
Kuwait and the UAE.

The military capabilities of the Gulf Co-operation Council - the economic and
security organisation established by Saudi Arabia and its five smaller Gulf
allies in 1981 - are doubtful, and to call for US assistance would be to play
into Mr Saddam's hands. The GCC states are thus left with few options other than
diplomacy and appeasement.

These issues are unlikely to be addressed directly at this week's Opec meeting,
but they form an essential backdrop that will set the tone for the meeting.
Kuwait and the UAE have been effectively isolated in their wish to keep a low
price target of Dollars 18 and they face the dangerous prospect of military
action or subversion should they continue to flout their production quotas.

The outline of the agreement likely to be adopted was drawn up in Jeddah two
weeks ago at a meeting of four GCC states plus Iraq. It calls for a production
ceiling close to 22.5m b/d, with a 1.5m b/d quota for the UAE, compared with
23.5m b/d of actual output in recent months.

Iraqi proposals for oil prices to rise to Dollars 25 a barrel before production
is increased again may turn out to be a bargaining position.his increases the
likelihood that a compromise Iranian plan to set a Dollars 20 target will be
adopted, if not formally at this meeting, then possibly in the autumn.

Mr Joseph Stanislaw, of Cambridge Energy Research Associates, believes that Opec
has entered a new phase which will be characterised by the accommodation of a
more powerful Iraq with a steadily rising oil production capacity. If Iraq is
frustrated in its call for Dollars 25-a-barrel oil it could seek to bargain this
away in exchange for a special increase in its production quota, perhaps next
year. Mr Issam al-Chalabi, the Iraqi Oil Minister, has in the past repeatedly
said that Iraq's goal was to increase revenue, not just to seek a certain price
or production target.

A number of other countries would be unhappy at the prospect of not being able
to increase production in the near term, and Venezuela and Libya are upset about
the erosion of their share of Opec production.

These conflicting interests make it difficult to chart a smooth path for future
oil prices. But Kuwait or the UAE, which have tried to keep prices low to stoke
demand, will now have far more difficulty in subverting Opec production
agreements. Higher oil prices would be the logical result.


GRAPHIC: Graph, no caption; Picture, Saddam Hussein Iraq's President ; Picture,
Sheikh Jaber Emir of Kuwait

                   Copyright 1990 The Financial Times Limited

                             2661 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 24, 1990, Tuesday

Paris meeting will try to settle NUM funds dispute


SECTION: SECTION I; UK News - Employment; Pg. 7

LENGTH: 379 words

THE International Miners' Organisation (IMO) has called leaders of the National
Union of Mineworkers to a meeting near Paris today to try to clear up 'serious
misunderstandings' over the ownership of Pounds 1.4m of donations.

Mr Alain Simon, the IMO's secretary general, is expecting to meet four members
of the 14-man NUM executive committee, which last week sued Mr Arthur Scargill,
NUM president, for return of the cash. Mr Scargill, who is also president of the
IMO, is due to be at the meeting, at a hotel near Charles de Gaulle airport.

Disclosure of the meeting came after miners' leaders in Mr Scargill's Yorkshire
powerbase passed a resolution urging their union to resolve out of court the row
over strike funds.

The NUM's Yorkshire area council called for talks between the union, national
officials, the International Miners' Organisation and 'any other third party'
and for a national conference to hear the results.he NUM decided last week to
sue Mr Scargill and Mr Peter Heathfield, union secretary, in an attempt to
recover the Pounds 1.4m reportedly donated by Soviet and other miners during the
1984-85 pit strike. The move followed a three-month inquiry by Mr Gavin Lightman

Mr Ken Homer, Yorkshire NUM general secretary, said: 'Our delegates realise that
the national executive council had no choice but to take the present action,
given the problems raised in the report and legal advice received.'

Lawyers representing the NUM went back to the High Court yesterday following
union moves last Thursday to sue Mr Scargill and Mr Heathfield for breach of
trust. They would not comment after the 45-minute private hearing before Mr
Justice Mervyn Davies.

At today's meeting in Paris the IMO aims to provide fuller details of why it
believes that the Pounds 1.4m at the heart of the row was not meant, as claimed
by the NUM, for the sole use of British miners. Mr Simon believes the money was
meant for miners across the world.

Diane Summers adds:The Trades Union Congress is to press Mr Scargill further on
the question of funds from Libya. Mr Norman Willis, general secretary, is to
emphasise that he considers assurances received in 1984 that Libyan funds had
not been sought also meant that they would not be sought in the future.


                   Copyright 1990 The Financial Times Limited

                             2662 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 23, 1990, Monday

Yorkshire NUM leaders discuss backing action against Scargill


SECTION: SECTION I; UK News - Employment; Pg. 6

LENGTH: 371 words

LEADERS of the National Union of Mineworkers' Yorkshire area will today decide
whether to back legal action against Mr Arthur Scargill, the union's president,
following moves against him by the union's national executive.

The meeting of the area council, which will discuss the inquiry by Mr Gavin
Lightman QC into Mr Scargill's handling of funds since the 1984-85 pit strike,
will be the first area discussion of the controversy.

At the same time, the TUC's finance and general purposes committee will examine
a letter from Mr Scargill defending his conduct in 1984 when there was publicity
over a visit to Libya by Mr Roger Windsor, the former NUM chief executive.

The meetings follow this weekend's visit to Paris by Mr Scargill, apparently to
discuss legal action against him and Mr Peter Heathfield, the union's secretary,
to recover about Pounds 1.4m held by the International Miners' Organisation.

Mr Alain Simon, general secretary of the IMO, has also been sued by the NUM,
along with Mr Norman West, Labour MEP for South Yorkshire, who is a signatory of
accounts in Dublin and Vienna controlled by the IMO. Mr Scargill is also
president of the IMO.

Mr Scargill has proposed a compromise with his union's executive, under which
there would arbitration or conciliation over who owns money thought to have been
given by Soviet and east European miners during the strike.

Although some members of the NUM executive believed Mr Scargill should be sued,
others backed legal action because of legal advice that unless they prevented
money in IMO accounts being moved, they would then make themselves liable.

If the Yorkshire area council backed legal action against Mr Scargill, it would
be a significant blow for him.

He has traditionally received solid backing from this area, which is also a
powerful voting block in the union.

Other areas are due to consider the Lightman inquiry over the next few weeks
before a delegate conference this autumn.

Writs served on Mr Scargill, Mr Heathfield, Mr Simon and Mr West claimed on
behalf of the NUM funds in a Dublin bank account, Pounds 10,000 in a Sheffield
account controlled by the IMO; and Pounds 37,116 paid into an IMO-controlled
account in Vienna.


                   Copyright 1990 The Financial Times Limited

                             2663 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 21, 1990, Saturday

After one controversy is defused, another erupts


SECTION: SECTION I; UK News - Employment; Pg. 5

LENGTH: 648 words

John Gapper considers new action against the NUM president after he survived the
Lightman inquiry

MR Arthur Scargill is now at risk over his handling of funds donated during the
1984-85 pit strike because of a separate issue to the one which prompted the
thorough and damaging inquiry by Mr Gavin Lightman QC.

Legal action started simultaneously in three capitals by the National Union of
Mineworkers is concentrated on more than Pounds 2m which Mr Lightman says is in
unaudited accounts to which Mr Scargill, the NUM president, has 'unrestricted

In contrast, the controversy over whether Mr Scargill and Mr Peter Heathfield,
the union's secretary, used funds from Libya to pay loans and mortgages has been
largely defused by Mr Lightman.

The issue to be decided by courts in London, Dublin and Vienna is whether the
NUM is the true owner of funds and interest payments stemming from a Pounds 1.4m
donation thought to have been made by Soviet and east European miners.

Mr Scargill's future as president of the NUM will be heavily affected by the
decision. Beyond that, the viability of the International Miners' Organisation
in Paris may depend on whether it can retain control of these funds.

Mr Lightman points out that a 'very, very substantial part' of the money now
controlled by the IMO - in spite of it having more than 6m affiliated members -
originally came from the donations made during the 1984-85 strike.

The IMO was formed in 1985 out of the Miners Trade Union International.he MTUI
was part of the Communist-controlled World Federation of Trade Unions - rival to
the International Confederation of Free Trade Unions.

Between February and December 1985, the Pounds 1.4m went from an MTUI account at
the Narodny Bank Polsky in Warsaw to an MTUI and then IMO account at the Irish
Intercontinental Bank in Dublin - later known as the Mireds fund.

This was supplemented with Pounds 580,608 from a strike fund operated by Mr
Scargill, known as the Miners Action Committee Fund trust. The dispute is over
the control of these funds.

Although the Mireds fund in Dublin still holds a substantial part of these
funds, some were transferred to other IMO-controlled accounts in Vienna.

Mr Lightman estimates that about Pounds 1.65m remains in the Dublin and Vienna
accounts. Mr Scargill has said separately that Pounds 1.8m remains, including
interest, in spite of withdrawals of Pounds 1.05m.

There are two views of who should own these funds:

The IMO: Mr Scargill is backed by Mr Alain Simon, general secretary of the IMO
and before that of the MTUI, in the view that the Soviet and east European funds
were intended for international miners, not just British ones.

Mr Scargill says the NUM has written confirmation from East German unions that
their donation was for international miners. There is not such confirmation from
the Soviet Coal Employees Union (CEU). In a speech to a Soviet Miners' Congress
in Moscow in March, Mr Scargill said that when the strike ended the NUM decided
in talks with the MTUI that the money would go to an MTUI special fund.

However, he has also attached importance to an interview given by Mr Vladimir
Louniov, president of the CEU, in which Mr Louniov said the CEU did not make the
Dollars 1m (Pounds 552,248) donation which was sent from the Soviet Union to the
account in Warsaw.

The NUM: Mr Lightman says he believes all monies in the Mireds fund were
intended for the benefit of the NUM rather than the IMO. The NUM therefore has a
claim to all the money and interest accrued. That view has received some backing
from Mr Mikhail Srebny, former president of the CEU, who says that a Dollars 1m
donation was made by the CEU and was intended solely for the benefit of British

When Mr Vic Allen, a professor at Leeds University, visited the Soviet Union,
East Germany and Hungary to raise strike funds, he gave the number of the MTUI
account and said money was needed to maintain the union's fabric.


GRAPHIC: Picture, Arthur Scargill, prevented from moving any funds

                   Copyright 1990 The Financial Times Limited

                             2664 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 20, 1990, Friday

Moscow oil cuts leave Bulgaria struggling


SECTION: SECTION I; European News; Pg. 2

LENGTH: 408 words

LONG QUEUES formed outside petrol stations in Sofia yesterday as Bulgaria became
the latest casualty of the Soviet decision to cut oil supplies to eastern Europe
by 7m tons a year.

Some oil refineries were forced to close earlier this month and the huge
Neftokhim refinery is running at 50 per cent of capacity. 'There is simply no
petrol at all,' said a western diplomat in Sofia.

BTA, the official Bulgarian news agency, reported this week that oil refining
was 1.3m tons short of target in the first half and that the value of output,
including petrol, was 250m Leva (Pounds 50m) less than planned.

The Soviet authorities this month reduced their oil deliveries to Bulgaria by 16
per cent in a move likely to cause considerable disruption to industry which is
dependent on Soviet energy imports.

Bulgaria imports 11.5m tons of crude oil a year, or 93 per cent of its needs,
from the Soviet Union. Last year the Soviet Union exported 78m tons of oil to
eastern Europe.

The Soviet move, which economists in Bulgaria said reflected the chaos of the
Soviet economy and the oil sector, coincided with a sharp cut this month in oil
deliveries to Czechoslovakia. This caused panic buying and forced the Government
to raise petrol prices. The Bulgarian authorities have given no hint that they
will raise petrol or heating prices, apparently confident that Moscow will
guarantee this year's oil supplies.

However, it is believed to be making contingency plans to exchange oil from Iraq
and possibly Libya in return for these countries' outstanding hard currency
debts to Bulgaria.

Meanwhile in Hungary, Mineralimpex, the foreign trade enterprise, has protested
to its Soviet partners about a reduction in crude deliveries. It said it was
told about the cuts only last week, adding that the Soviet Union would be able
to supply only 386,000 tons instead of the planned 546,000 tons for July.

Energy experts in Hungary said that if this trend continued, the country would
have a shortfall of up to 500,000 tons of oil. Hungary has a contract to import
6.8m tons from the Soviet Union this year.

Hungary also has contingency plans with Iraq through the under-used Adria
pipeline which has a capacity of 5m tonnes a year. The problem is the cost. If
Soviet oil deliveries are down by 30 per cent during the whole of the second
half year, as Hungary fears, then the authorities may be forced to import oil
costing Dollars 50m-Dollars 60m.


                   Copyright 1990 The Financial Times Limited

                             2665 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 19, 1990, Thursday

International effort to meet new world screw worm threat

SECTION: SECTION I; Commodities & Agriculture; Pg. 32

LENGTH: 169 words

BRITAIN HAS pledged Pounds 1m towards an emergency Pounds 17m fund for the
eradication of a flesh-eating parasite threatening humans and livestock in
north-west Libya.

Announcing the pledge, made at a Rome conference held by the UN's International
Fund for Agricultural Development and Food and Food and Agriculture
Organisation, the Overseas Development Administration said that, unless
controlled the new world screw worm was likely to spread to other African
countries and could even pose a threat to southern Europe. It was unknown
outside the Americas until 1988.

The screw worm fly lays its eggs on open wounds as small as a tick bite. After
hatching the larvae burrow into the living flesh and about 20 per cent of their
livestock victims die.

To break the reproductive cycle millions of sterile insects are to be released
weekly in infested areas over a period of two years.

The US and arab banks were the biggest donors to the eradication fund, the first
phase of a Pounds 65m programme.


                   Copyright 1990 The Financial Times Limited

                             2666 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 18, 1990, Wednesday

Czechoslovakia reels under Soviet oil cuts;
Petrol prices rise by at least 50% as reserves sink to just a few days' supply


SECTION: SECTION I; European News; Pg. 2

LENGTH: 618 words

CZECHOSLOVAKIA yesterday accused the Soviet Union of cutting oil supplies
severely to the country without warning, and said it was forced to raise petrol
prices by at least 50 per cent to curb consumption.

Mr Vladimir Dlouhy, the Economics Minister, said Moscow 'unexpectedly' slashed
oil supplies to Czechoslovakia by 35 per cent this month, after previous smaller
cuts. A 30 per cent drop in oil was signalled for the next three months.

Overall, Soviet oil deliveries were 16 per cent lower this year and would be
'substantially' less next year, he told the Financial Times. Czechoslovakia was
this year to have received 16m tonnes of crude oil from the Soviet Union, as in
past years.

The Czechoslovak Government said yesterday that petrol prices would rise by at
least 50 per cent from their present 9 Koruna a litre for super and 7.50 Koruna
for diesel, but said that exact rises would be announced later.

In Prague, meanwhile, angry motorists formed mile-long car queues at petrol
stations across Czechoslovakia. 'It looks like Brezhnev's revenge,' one
motorist, queuing patiently for petrol in Prague noted dryly.

Mr Dlouhy said petrol reserves had sunk to only a few days' supply, while the
Government feverishly sought alternative sources.

Mr Vaclav Klaus, the Finance Minister, said the Government was not officially
notified of the oil cutbacks by the Soviet Government, but was simply informed
by the Czechoslovak oil importer. Prague repeatedly asked Moscow for talks, but
senior Soviet economics officials said they were involved in preparations for
the recent Soviet party congress.

'I became increasingly angry in my letters to Minister Popov (the Soviet Finance
Minister) but they were not prepared to meet us until now,' Mr Klaus explained.

Mr Slavomir Stracar, the Czechoslovak Minister of Foreign Trade, will confer on
the oil crisis in Moscow next week, and Mr Yuri Maslukov, the head of Gosplan,
the Soviet planning commission, has agreed to meet Mr Dlouhy in Moscow in early

Moscow has recently reported growing difficulties with oil production, and said
last week that deliveries to eastern Europe overall would be curtailed by 7m

Hungary also recently complained of shortfalls in Soviet supplies.

Mr Dlouhy said the advantage to Czechoslovakia - and other east European
countries - of Soviet oil was that it could be paid for (under what is
effectively a barter system) with relatively low-quality machinery. Moscow would
continue to require this machinery, even when trade was placed on a hard
currency basis next January 1.

Czechoslovakia has contracted to receive nearly 50,000 tonnes of petrol from the
west, Mr Dlouhy disclosed, but was reluctant to buy more than absolutely needed
in order not to increase its low level of foreign debt.

One possibility would be for the country to seek oil from Syria, Libya and
Algeria, each of which have outstanding debts to Czechoslovakia. Another would
be to obtain oil from Iran through pipelines across the Soviet Union.

Mr Klaus said he held talks with leading western oil companies on possible moves
if oil supplies from the Soviet Union were halted entirely. 'It could be that
the west will do what it did in the case of Lithuania,' he remarked, omitting
the word 'nothing.'

Czechoslovakia is negotiating with West German banks on a sizeable loan later
this year, related to its economic reforms.

A senior Czechoslovak official noted that with 40 per cent of debt in short-term
maturities, Czechoslovakia's position as a borrower was not overly strong. The
increase in Czechoslovak debt this year would depend greatly on the amount of
oil which needed to be imported from the west, he said.


GRAPHIC: Picture, People power, Prague motorists put their shoulders to thewheel
in the queue for petrol

                   Copyright 1990 The Financial Times Limited

                             2667 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 16, 1990, Monday

Scargill reply likely this week on Libya claim


SECTION: SECTION I; UK News - Employment; Pg. 8

LENGTH: 330 words

MR Arthur Scargill, President of the National Union of Mineworkers, is expected
to respond this week to a call from Mr Norman Willis, general secretary of the
Trades Union Congress, to explain alleged approaches to Libya for financial aid
during the 1984-85 miners' strike.

Also this week, a four-man sub-committee of the NUM executive will decide
whether to take legal action to recover funds it is claimed are held abroad.

It is likely that Mr Scargill will write to Mr Willis saying that he sees no
conflict between statements made at the time of the strike and subsequent
events. He has said by telephone that he would send Mr Willis a copy of the
report written by Mr Gavin Lightman QC, following an inquiry into the handling
of funds both during and since the strike.

The TUC's finance and general purposes committee, which meets a week today,
would be the next available forum for discussion of the report and Mr Scargill's

Mr Willis claimed he had been given 'a categorical assurance' in October 1984
that no funds were being sought or received from Libya. Mr Roger Windsor, the
former NUM chief executive, had just visited Libya. Mr Scargill said the 1984
statement was not jointly agreed with him and had come from Mr Willis.

The Lightman inquiry, which was critical of Mr Scargill, said the NUM had sought
financial aid from Libya, and that Pounds 150,000 could have come from the
Libyan Government.

The four members of the NUM executive are due to meet Mr Lightman early this
week in time to report back to the national executive on Thursday.hey will
discuss the possibility of claiming about Pounds 1.8m held in accounts in Dublin
and Vienna and controlled by the Paris-based International Miners' Organisation.

Mr Scargill has suggested that the NUM would be unable to claim the money
because statements from Soviet and East German miners' unions had made it clear
that donations were intended for international, rather than just British, use.


                   Copyright 1990 The Financial Times Limited

                             2668 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 14, 1990, Saturday

Land of the counterfeit dollar



LENGTH: 1262 words

Lara Marlowe on the spread of fake bills in Lebanon

GENERAL ISSAM Abu Zaki, the head of Lebanon's judiciary police, pulls a Dollars
100 bill from an envelope, runs his finger over it and holds it out for
inspection. 'Is it real?' he asks rhetorically. He knows that like the dozens of
other Dollars 100 bills spread out in front of him, it is a counterfeit.

Because of the 15-year-old civil war and his more-than-limited jurisdiction, Gen
Abu Zaki and his colleagues can only wait for victims of counterfeiting to turn
in their bad notes without hope of recompense. On Gen Abu Zaki's desk is one of
those statues of three monkeys, seeing, hearing and speaking no evil. It sums up
the role of Lebanon's police.

On the wall behind Gen Abu Zaki's desk the problem is more accurately defined by
a verse from the Koran. 'If an evil-liver brings you tidings,' says surah 49,
verse 6, 'verify it, lest ye smite some folk in ignorance and afterward repent
of what ye did.' No-one in Beirut is 'smitten in ignorance,' least of all by the

It was probably inevitable that of all countries, Lebanon would be flooded with
high-quality counterfeit banknotes.

'All crime is linked,' Gen Abu Zaki says, 'because people who are dealing with
drugs and weapons are also dealing in counterfeit currency and prostitution.
Some of the counterfeits are printed in the Lahad (Israeli occupied) area of
Lebanon, and some are printed in Israel and distributed in southern Lebanon. The
quality we have here in Lebanon is not nearly as good as the quality coming from
Israel.' The police, and Lebanese officials, believe that the Israelis are
deliberately introducing counterfeit notes into Lebanon to destabilise the
economy, just as Nazi Germany and Great Britain counterfeited each others'
currency during the Second World War. Other Lebanese offer an equally bizarre
explanation for the effusion of counterfeit Dollars 100 bills.

'The Americans paid the Iranians counterfeit hundreds for some of their
hostages,' says a Hamra Street banker. 'The Iranians are using the American
fakes to pay the Hizbollah.'

The worst counterfeits are thick, discoloured notes, easily identified by the
Lebanese. They are printed on offset presses in the Bekaa Valley.

Officials at Lebanon's central bank have noticed a high demand for US Dollars 1
bills - which are often sold on the street for twice their nominal value -
because counterfeiters find that by rinsing the ink off them and reprinting them
as Dollars 100s, the paper at least is real.

There appears to be no end to the supply of counterfeit banknotes. Gen Abu Zaki
reckons there are 'hundreds of thousands of fake Dollars 100 bills' circulating
in his country. Lebanese bankers say many of the notes find their way to Syria
and Europe.

'It is very difficult to penetrate zones like the Bekaa,' Gen Abu Zaki says. 'As
soon as a printing plant is discovered,they just move their equipment and
money.' But the general proudly boasts a couple of small local victories for his
police force.

They recently arrested a man in Beirut's southern suburbs with more than Dollars
1m in poor-quality Dollars 100 bills packed in a suitcase.he man said he had
intended to take the money to Libya.

'People in Libya aren't used to the problem. They might not have noticed,' says
Colonel Malik Abdul Khaled, the chief of the counterfeiting and forgery division
of Lebanon's judiciary police.

Last year, the police raided a printing plant in the seaside Jal-el-Bahar
quarter of Beirut. The plant, which was owned by one of Lebanon's militias,
printed books during the day and at night switched over to American Express
travellers' cheques and Saudi riyals.

In the cupboard in his office, Col Abdul Khaled still has 13 thin zinc metal
plates, each 60cm by 70cm wide, with images, letters and figures outlined by
non-printing areas, non-receptive to ink. Each plate corresponds to one colour
on the Saudi bills or travellers' cheques.

In spite of the danger of ending up with worthless paper, most Lebanese still
prefer dollars to their own unstable Lebanese pound. Three quarters of the money
used in Lebanon is dollars. In the Israeli-occupied 'security zone' of southern
Lebanon, counterfeit notes are said by police to be so prevalent that no-one
dares to question their value. But elsewhere, the abundance of counterfeits is
making it difficult to spend even legitimate banknotes.

In the southern Lebanese town of Naqoura, where United Nations troops have their
headquarters, international telephone operators will not accept Dollars 100

In Beirut, shopkeepers and money changers run their fingers over each bill, hold
it up to the light and often leave clients waiting while they run to a nearby
colleague or bank to seek a second opinion. If the bill is judged to be worn,
soiled, too thin, too thick or off-colour, the merchant will refuse a sale
rather than risk taking a phony. Sometimes he writes down the client's passport
number and asks him to sign the bill so he can be traced if the note proves to
be a fake. Would-be passers of counterfeit money have been known to take flight
when the money changers of Hamra Street test their Dollars 100 bills under an
ultra-violet lamp. US currency - whether fake or real - has no hidden or
fluorescent features, but the ultra-violet lamp is used for psychological

'We have no more sophisticated means of detection than the general public,' says
one of Gen Abu Zaki's deputies. 'We take a Dollars 100 bill which we know is
good and compare it with the one we are testing.

'First we look for colour, then the feel of the paper. You should feel the
raised printing where it says 'United States of America' and the corners of the
bill with the '100' feel like the scales of a fish.

'We check the number against lists of known fakes, the dimensions of the paper,
the disposition of the figures and images on the note. A real note shouldn't
crease when you fold it.'

If Lebanon's police can do little to stop the counterfeit presses, Lebanon's
central bank, which has taken extreme measures to protect its own currency,
feels it has no responsibility for the American dollar. Perhaps understandably,
officials at the central bank seem to relish the misfortunes of those who have
so unpatriotically persisted in trading in dollars.

'The Lebanese pound is extremely secure against counterfeiting. Only its value
is not safe,' says Mohammed Naffi, an expert on counterfeiting and one of the
bank's highest-ranking managers.

The Bank of Lebanon has for many years contracted with Thomas de la Rue of
London to print bank notes incorporating most of the security features
available. The resulting banknotes are so beautifully printed with scenes of
Lebanese classical ruins that it seems criminal to squander them for their
paltry buying power. The highest-denomination banknote, printed by special order
of the Lebanese Parliament to cope with devaluation and inflation, is LPounds
1,000, which is worth approximately Pounds 1 sterling.

Lebanese criminals have nonetheless found a uniquely Lebanese way of reproducing
the Pounds 1,000 notes. They fan 10 out, make one cut down the middle, then
reassemble the notes with transparent tape.

The process creates 11 banknotes out of 10, each just 5-10mm shorter than the
original. The central bank now refuses to accept any Lebanese note with tape on

'It's not difficult at all to counterfeit dollars,' Naffi says. 'The dollar has
no watermark, no security thread,no fluorescent fibres and only one colour. All
denominations are the same size. It is not a secure currency.'


GRAPHIC: Picture, General Issam Abu Zaki, the head of Lebanon's judiciarypolice,
contemplates a small portion of the millions of dollars incounterfeit money
circulating in Lebanon.

                   Copyright 1990 The Financial Times Limited

                             2669 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 14, 1990, Saturday

Scargill to face libel action from ex-NUM chief Windsor

BYLINE: Our Labour Staff

SECTION: SECTION I; UK News - Employment; Pg. 4

LENGTH: 296 words

MR ROGER WINDSOR, the former chief executive of the National Union of
Mineworkers, has been granted leave by an Irish court to sue Mr Arthur Scargill,
the NUM president, for libel.

Mr Justice Hamilton, president of the High Court in Dublin, gave permission for
proceedings to be pressed against Mr Scargill and The Sunday Times newspaper.

In an affidavit read by his lawyer, Mr Windsor said that Mr Scargill had 'set
about an attempt to discredit me by every means at his disposal.'

'He has in particular made false allegations of fraud against me and a number of
newspapers have published these allegations which are false and highly
defamatory of me.'

Mr Windsor co-operated with investigations by the Daily Mirror and Central
Television's The Cook Report into the financial affairs of the NUM during the
1984-85 miners' strike.

These led to allegations that the NUM received money from Libya during the
strike and that union money was used to pay off loans to NUM officials.

A subsequent inquiry by Mr Gavin Lightman, QC, found that Mr Scargill misapplied
funds during the strike but cleared him and Mr Peter Heathfield, the general
secretary, of using money received during that time for paying off loans.

Mr Windsor, who now lives in Jarnac, France, said he was bringing the
proceedings in Ireland because 'the solicitor I have most confidence in
practises within this jurisdiction.'

He said Mr Scargill could not complain about being sued in Ireland as he had
stated that the union got a fairer hearing in Irish courts than in British ones
after proceedings over NUM funds in an Irish bank five years ago.

The affidavit also referred to an article published in The Sunday Times on
October 15 last year under the headline 'Scargill man in fraud riddle.'


GRAPHIC: Picture, Roger Windsor, granted leave by Dublin court

                   Copyright 1990 The Financial Times Limited

                             2670 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 11, 1990, Wednesday

TUC questions Scargill over alleged Libya link with NUM;
Miners' leader faces growing pressure from Labour over his handling of union


SECTION: SECTION I; Back Page; Pg. 22

LENGTH: 487 words

MR Arthur Scargill, president of the National Union of Mineworkers, last night
faced growing pressure from within the Labour movement over his handling of
funds during and after the 1984-85 miners' strike.

Mr Scargill was asked by Mr Norman Willis, general secretary of therades Union
Congress, to explain if he had misled Mr Willis in 1984 by telling him that the
NUM had not sought or received funds from Libya.

Mr Scargill's statement that about Pounds 1.4m donated by Soviet and east
European miners was not intended for British miners alone was also questioned by
Mr David Blunkett, the Labour MP for Sheffield Brightside.

The interventions by Mr Willis and Mr Blunkett followed a call from Mr Kim
Howells, Labour MP for Pontypridd and a former South Wales NUM official, for the
fraud squad to investigate Mr Scargill's handling of funds.

Public criticism of Mr Scargill from outside the NUM has been swelling since the
publication last week of an inquiry by Mr Gavin Lightman QC, which was critical
of Mr Scargill.

The controversy did not affect support for Mr Scargill at his union's annual
conference in Durham on Monday, but his position may be weakened by discussions
on the Lightman inquiry in NUM areas following the conference.

Mr Willis wrote to Mr Scargill after reading a report in the Financialimes that
Mr Lightman had found that the NUM had sought financial aid from Libya, and that
a Pounds 150,000 donation could have come from the Libyan government.

In October 1984, Mr Willis said he had been given 'a categorical assurance' by
Mr Scargill that no funds were being sought or received from Libya. Mr Roger
Windsor, the former NUM chief executive, had just visited Libya.

Mr Scargill said he could not respond to Mr Willis's letter because he had not
yet received it. He said the 1984 statement was issued by Mr Willis:it was not
jointly agreed and 'it was certainly not issued by me.'

Mr Blunkett, who was a trustee of a fund intended to help miners' families
during the strike, asked whether 'anybody seriously believed' that money from
Soviet miners was not intended specifically for such aid.

He said he was seeking 'urgent clarification' of how these funds had been
handled. About Pounds 1.8m remains in funds overseas controlled by the
Paris-based International Miners Organisation, of which Mr Scargill is

Mr Willis said Mr Lightman had been reported in the Financial Times on July 4 as
having found that 'Mr Scargill sought financial aid from Libya' and believing
that a sum of Pounds 150,000 'may have been received from Libya.'

Mr Willis said: 'When there were reports about the possibility of the NUM
seeking funds from Libya, you assured me that you had neither sought nor
received money from Libya.' Mr Lightman said in his report he was satisfied that
Mr Scargill had not only sought political help from Libya but also financial

Employment, Page 10


GRAPHIC: Picture, Norman Willis, seeking an explanation over funds

                   Copyright 1990 The Financial Times Limited

                             2671 of 2746 DOCUMENTS

                        Financial Times (London,England)

                              July 9, 1990, Monday

NUM faces new allegation over strike funds


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 586 words

THE National Union of Mineworkers last night faced a fresh allegation over the
handling of funds during the 1984-85 pit strike as Mr Arthur Scargill, its
president, reiterated his innocence of 'anything criminally wrong.'

Mr Scargill rejected a suggestion to be made tonight in a television documentary
that the NUM was responsible for presenting a forged document to the inquiry by
Mr Gavin Lightman, QC, into the use of donated funds.

Speaking on the eve of the union's annual conference in Durham, he said he would
be happy for up to Pounds 1.4m donated by Soviet and east European miners to be
returned to the NUM by the Paris-based International Miners Organisation.

Mr Scargill, who may today face questions on the Lightman inquiry in a closed
session of the conference, said he would not resign as president of the IMO,
which controls accounts in which the money has been placed.

He said it would be 'completely barmy' if the NUM had to sue the IMO for the
return of this money. 'I am quite convinced there can be a solution to this
problem and I explained that to the inquiry.'

If it could be shown that Dollars 1m (Pounds 580,000) donated by Soviet miners
during the strike, and later added to by donations from other countries, was
intended for the NUM then he would be happy for the money to be returned.

Mr Roger Windsor, the NUM's former chief executive, will say tonight in a
Central Television documentary that his and his wife's signatures were forged on
a document presented to the inquiry by the NUM.

The deed, dated September 1987, says that Mr Windsor owes the IMO Pounds 29,500
as the repayment of a bridging loan made to him by the NUM during the strike. Mr
Windsor originally claimed that the money came from Libya.

Mr Scargill said an investigation might be needed, but 'it certainly has nothing
to do with me.'

Although there may be some discussion of the Lightman inquiry at the conference
today, members of the NUM executive said they believed any action against Mr
Scargill would have to follow a further inquiry into the Soviet donations.

Some executive members think that disciplinary action or a police inquiry could
follow a investigation by an international lawyer into funds donated by miners
abroad to help British miners during the 1984-85 strike.

Members of a four-man sub-committee of the NUM executive are to meet Mr Lightman
to get advice on determining who owns the IMO monies. The results of a further
inquiry may go to a special delegate conference this autumn.

Mr Ken Hollingsworth, executive member of the union's Cosa white-collar section,
said he believed Mr Scargill should resign the presidency of the IMO.

However, Mr Hollingsworth added that he expected support for Mr Scargill at the

In the report of the Lightman inquiry, Mr Scargill was strongly criticised for
'breaches of duty' in putting donations in a Dublin fund controlled by the IMO.
Mr Scargill said some money had been transferred to accounts in Vienna.

Mr Scargill said Soviet miners' leaders had originally said the money was not
intended for the NUM. However, if they now said publicly they had changed their
minds, he would be 'absolutely delighted' to switch the money.

Although the Lightman inquiry found that Mr Scargill misapplied funds during the
strike, it cleared him and Mr Peter Heathfield, the union's general secretary,
of using money received during the strike on behalf of the NUM and its members
for paying off home loans or improvement loans.


                   Copyright 1990 The Financial Times Limited

                             2672 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 5, 1990, Thursday

Disclaimer on Libya cash 'begging belief'


SECTION: SECTION I; UK News - Employment; Pg. 8

LENGTH: 398 words

MR Arthur Scargill's claim that the union did not seek financial support from
Libya during the pit strike is dismissed as 'begging belief' in the report.

Mr Gavin Lightman, the QC who conducted the inquiry, also doubts the NUM
president's interpretation of the handling of at least Dollars 1m (Pounds
562,000) thought to have been raised by a levy on miners in the Soviet Union.

Mr Scargill has always maintained that the NUM sought political, rather than
financial, help from Libya. Mr Lightman says that Mr Scargill 'certainly sought
financial aid for the Miners' Solidarity Fund.

'I incline to the view that the financial aid sought . . . included aid to
sustain the NUM and the strike itself,' says Mr Lightman.

The report says there is no proof, but that 'the material before me suggests
that a payment of Pounds 150,000, stated in the records to have been received
from the CGT (a French trade union grouping), may have been received from Libya.

The Libyan financial connection surfaced among claims by Mr Roger Windsor,
former NUM chief executive, in newspaper and television interviews. He said he
had received three instalments of Pounds 50,000.

Mr Windsor refused to give evidence to the inquiry but Mr Lightman says he
cannot believe that a visit to Libya by Mr Windsor was merely there to explain
the union's case, as Mr Scargill claimed.

The report finds that it was highly likely that miners in the Soviet Union, East
Germany and Hungary contributed to a a trust held by the Miners Trade Union
International, a forerunner of the International Miner's Organisation, of which
Mr Scargill is now president.

'They must have believed (the MTUI trust) was operated on Mr Scargill's
instructions and was the appropriate channel to pay money for the benefit of the
NUM,' he says.

Mr Lightman disputes Mr Scargill's account that Soviet miners refused to pay
money into the NUM and wanted instead to pay it into a trust which could benefit
miners throughout the world. It was Mr Scargill who wanted money from the Soviet
Union to go to the MTUI, he says.

This 'had the advantage that if the monies were paid into that trust, they would
not be, or not appear to be, the monies of the NUM and . . . would be exempt
from the attention of the receiver,' he says. No benefits have been received by
the NUM out of the money donated by the Soviet miners, the report says.


                   Copyright 1990 The Financial Times Limited

                             2673 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            July 4, 1990, Wednesday

Inquiry censures Scargill for misapplication of strike funds

BYLINE: MICHAEL SMITH, Labour Correspondent

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 611 words

MR Arthur Scargill, president of the National Union of Mineworkers, was
yesterday found by an inquiry to have misapplied funds and breached his duties
in handling the union's finances during the 1984-85 pit strike.

However, the report by Mr Gavin Lightman, QC, cleared Mr Scargill and Mr Peter
Heathfield, NUM general secretary, of using money received during the strike on
behalf of the union and its members for paying off home loans or improvement

After an all-day executive meeting, Mr Scargill said last night he had no
intention of resigning. 'I have not misappropriated funds, I have not done
anything wrong. Everyone on the executive has agreed today that Mr Scargill and
Mr Heathfield did not have their hands in the till,' he said.

Among a series of damning criticisms, Mr Scargill and Mr Heathfield were
condemned for their handling of loans without the prior consent of the union's
national executive. In the report, Mr Lightman said:'Both may have believed that
they were acting properly. However, I find it a matter for concern that, in
particular in the case of Mr Scargill, he did not recognise the impropriety of
what seemed to me to have been so obviously wrong.'

The report, prepared over three months, follows articles in the Daily Mirror and
on Central Television's Cook Report. These alleged that money had been received
from Libya and the USSR, which was denied by Mr Scargill.

Mr Lightman found that Mr Scargill sought financial support from Libya. 'The
material before me suggests that a payment of Pounds 150,000 . . . may have been
received from Libya (but) I can reach no conclusive view on this question.

'As regards the USSR, it is as clear that at least Pounds 1m or possibly Dollars
1m was raised by levy on miners by the union to support the NUM, and that this
money was paid and utilised to the assets of the International Miners
Organisation, of which Mr Scargill is president.'

The report concluded that the NUM received little or no benefit from this fund
and most certainly not the benefit intended.

Mr Lightman found that money from Libya or the USSR was not used to repay any
home loan of Mr Scargill or Mr Heathfield. 'Mr Heathfield never had a home loan
until much later and Mr Scargill had sometime before repaid his home loan out of
his own monies.'

Mr Lightman said following the sequestration of union funds in October 1984, the
union had operated two separate sets of accounts, the official accounts properly
administered and audited and the unofficial accounts operated by national
officials - in effect Mr Scargill - with no supervision or control.

'The very existence of these separate funds, their collection Continued on Page

and distribution, their retention and investment, and most of all their
non-disclosure, involved breaches of duty by the national officials.'

Mr Lightman said Mr Scargill had acted throughout without the benefit of proper
informed legal or accountancy advice. 'I regret that I am of the view that was
in part because Mr Scargill was unwilling to accept the constraints which such
advice would have placed upon him.'

The report also criticised Mr Heathfield for misleading the union as to the
character of the works to be carried out on his house. 'It may be because the
works were so misdescribed that the NUM in fact paid for them twice.'

Mr Lightman said two loans - Pounds 100,000 to Mr Scargill and Pounds 60,000 to
Mr Heathfield - were made by the IMO at the end of the strike. He said both men
had not disclosed these to the NUM executive. Mr Scargill's loan has been repaid
and Mr Scargill said yesterday that Mr Heathfield's loan would be repaid.


                   Copyright 1990 The Financial Times Limited

                             2674 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             July 3, 1990, Tuesday

NUM executive to consider findings of finance inquiry

BYLINE: MICHAEL SMITH, Labour Correspondent

SECTION: SECTION I; UK News - Employment; Pg. 10

LENGTH: 257 words

THE EXECUTIVE of the National Union of Mineworkers will meet today to consider
the findings of a three month investigation into allegations about the way its
leaders handled finances during the 1984-85 pits strike.

Mr Gavin Lightman QC is expected to clear the leadership of the most damaging
allegations:that money sent by Colonel Gadaffi of Libya in 1984 was used to pay
off a Pounds 25,000 mortgage on the home of Mr Arthur Scargill, the president,
and a Pounds 17,500 loan to Mr Peter Heathfield, general secretary.

However, right wingers within the union believe the report may show that Mr
Scargill broke union rules through his handling of bank accounts.

If that is the case, one option is to attempt to suspend him. To succeed in
this, however, they would need a two thirds majority on the 15-man executive,
which is meeting at the NUM headquarters in Sheffield.

A more likely course of action would be to refer the report to the union's
annual conference which meets in Durham City next week. A third possibility is
that a special meeting of delegates be convened after the conference.

Mr Lightman's inquiry was set up by the NUM executive in March after allegations
by Mr Roger Windsor, the union's former chief executive, were reported in the
Daily Mirror and Central Television's Cook Report.

Mr Scargill has vehemently denied that Pounds 163,000 was sent by Libya during
the dispute. He says that no money donated for relieving the hardship of miners
has been used for his or Mr Heathfield's personal benefit.


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                             2675 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             June 29, 1990, Friday

Opec ministers squabble as oil prices languish


SECTION: SECTION I; Commodities & Agriculture; Pg. 36

LENGTH: 504 words

THE ORGANISATION of Petroleum Exporting Countries looks set for a stormy meeting
in Geneva at the end of July as mutual recriminations among Opec ministers reach
a high pitch while oil prices languish at 18-month lows.

Mr Sadek Boussena, the Algerian Oil Minister who serves as Opec president,
concluded a whirlwind tour of the main Gulf producers this week with a promise
that Opec members would abide by agreements to cut production.

'Following these contracts, we expect all states to abide by the organisation's
decisions irrespective of the reasons and justifications,' he said in Jeddah on

However, oil markets were unconvinced and fell steeply in late trading, mainly
in response to disappointment at continued high stocks in the US. Yesterday
prices rose moderately following rumours - later officially denied - of an
Israeli attack on Libya.

Mr Boussena is trying to stitch together an agreement in advance of the Opec
ministerial conference next month. He plans to meet the oil ministers of
Indonesia and Kuwait in Algiers next week.

However all indications are that Opec members are far apart in their views.

Mr Saadoun Hammadi, Iraqi Deputy Prime Minister, has blasted Kuwait and the
United Arab Emirates for producing above their Opec quotas and said that Opec
oil quotas should not be reviewed until a 'fair oil price' was achieved, which
he said was Dollars 25 a barrel. This is 40 per cent higher than the Opec
reference price of Dollars 18 a barrel and about 80 per cent above present

'I don't consider Dollars 25 a high price by any standards,' said Mr Hammadi,
after a meeting in Kuwait with Sheikh Jaber al-Ahmed al-Sabah, the Emir of

Kuwait's policy of producing above quota is widely seen as an effort to wreck
efforts within Opec to raise the reference price above Dollars 18 a barrel.

Kuwait is concerned that excessively high prices could cut oil demand by
spurring efforts for energy conservation. It would also increase the
profitability of oil exploration outside of Opec.

Mr Rashid Salem al-Ameebi, Kuwait's newly-appointed Oil Minister, is understood
to have told Mr Boussena that Kuwait was making efforts to reduce oil production
to its 1.5m barrel-a-day quota, but that this goal was hard to achieve.

Mr Hammadi's attacks on Kuwait and the UAE were unusually strident and direct.
Iraq, which badly needs oil revenue to rebuild it economy, claims to be losing
Dollars 1bn a year for every Dollars 1 price drop.

Mr Issam al-Chalabi, Iraq's Oil Minister, also had harsh words for the UAE. 'Why
is the UAE producing 2m barrels a day for Dollars 10 (a barrel) instead of 1.5m
for Dollars 18 or more?' he asked. 'Which of the two alternatives brings a
higher revenue? . . . Or do we need a lesson in multiplication?'

OFS, the Norwegian oil workers' union, is threatening to strike from next Monday
forcing a stop to oil and gas production, writes Karen Fossli in Oslo. Norway,
western Europe's second producer, produces about 1.7m barrels a day.


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                        Financial Times (London,England)

                            June 28, 1990, Thursday

West Germany jails poison plant chief

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 48 words

Jurgen Hippenstiel-Imhausen, former managing director of the Imhausen chemical
concern in southern Germany, was sentenced at Mannheim to five years in jail for
illegally helping Libya to build a poison gas factory near Tripoli.

He pleaded guilty, admitteding large-scale tax evasion.


                   Copyright 1990 The Financial Times Limited

                             2677 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            June 27, 1990, Wednesday

Summit is 'overshadowed' as IRA steals headlines;
Carlton blast leaves Government on defensive, Waddington tells of reluctance to
give publicity to terrorists



LENGTH: 727 words

MRS MARGARET THATCHER said it all with her first words at a post EC summit news
conference in Dublin yesterday. 'The summit has to some extent been overshadowed
for us by the terrorist bomb at the Carlton Club.'

With one bomb, the IRA had once again made the headlines, its Semtex-fuelled
propaganda machine had scored another victory. Other issues were forgotten.

The Carlton Club bombing was not a change of tactics on the IRA's part.he
organisation strikes at anyone it regards as lending support to what it calls
the British 'Crown Forces.'

That does not only mean soldiers, whether in or out of uniform, whether based on
the Rhine or in the Falls Road. In Northern Ireland it means policemen.

It also means building contractors who might be foolhardy enough to carry out
work for the security forces. It might mean a milkman who delivers to a police

In the Commons, the Government again found itself on the defensive.

Late on Monday, after returning from the scene of the bombing, Sir Geoffrey
Howe, Leader of the House, was anxious to satisfy MPs clamouring for details.

By the next day, Mr David Waddington, Home Secretary, found himself obliged to
make a statement to MPs that he would probably have preferred not to have made.
The Government was responding to an incident that, if it had happened in Ulster,
would scarely have made the inside pages in mainland newspapers.

'We must be very reluctant indeed to give unnecessary publicity to the
perpetrators of these outrages,' Mr Waddington said.

The Carlton Club might not be associated in any way with the military, but it is
one of the symbols of the Tory establishment, which, in the IRA's view, supports
the continuing partition of Ireland.

A similar rationale lay behind the IRA bombing earlier this month of the home of
Lord McAlpine, a former treasurer of the Conservative Party and a confidant of
Mrs Thatcher.

However, the scale of the IRA campaign has changed. In the 1970s and early 1980s
the IRA caused mayhem with an indiscriminate bombing campaign in Belfast,
London, Birmingham and elsewhere.

The campaign cost many lives, almost all of them the lives of civilians.

The emergence of Sinn Fein, the IRA's political wing, was one reason the bombing
campaign was halted. Civilian deaths - 'mistakes' in IRA parlance - cost Sinn
Fein valuable votes.

The IRA was also refining its operations. Extensive arms shipments from Libya in
1987 - believed to total at least 150 tonnes - have given the IRA the resources
to wage a prolonged and sophisticated terrorist campaign.

The strategy in the past few months has succeeded in bringing IRA activities
once more into the minds of people in Britain.

Either by coincidence - or design - it has occurred as Mr Peter Brooke, Northern
Ireland secretary, has made genuine progress towards starting talks on the
political future of the province.

A statement on his plans is expected in the Commons early next month. In it, Mr
Brooke will outline how three sets of relations will be considered in
tandem:between north and south Ireland, between London and Dublin and within the
province itself.

The package appears to have satisfied all the province's constitutional parties
- not a small achievement after more than two decades of 'Theroubles.'

Throughout, though, Sinn Fein has been excluded; specifically debarred by
successive Northern Ireland secretaries. If change is in the air, the IRA must
be anxious that its voice is heard.

It still has substantial supplies of Semtex, a light, odourless and highly
lethal explosive, at its disposal. The IRA has arms dumps scattered about
Northern Ireland, the Irish Republic, mainland Britain and in continental

The IRA appears to be short of trained operatives who can use such weaponry,
however. Its leadership seems to be trying to use the organisation's scarce
manpower to full effect by launching attacks at carefully selected targets -
whether in Gibraltar, the Netherlands, on railway platforms in the English
Midlands or in central London.

The IRA can thus portray itself as a highly skilled force, liable to strike
anywhere at any time.

It is a strategy straight out of any guerrilla warfare textbook.

Monday night, as European leaders gathered in Dublin, was the opportune moment,
as Mrs Thatcher admitted, for the IRA to gain maximum publicity.


GRAPHIC: Illustration, no caption; Graph, no caption

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                             2678 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            June 23, 1990, Saturday

Mandela sparks friction in US


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 318 words

TWO days into his US tour, Mr Nelson Mandela has walked into a political
minefield by declaring unequivocal support for Colonel Muammer Gadaffi of Libya,
President Fidel Castro of Cuba, and Mr Yassir Arafat, chairman of the Palestine
Liberation Organisation.

The South African black leader's remarks - including a reference to Mr Arafat as
a 'comrade in arms' - have disappointed the American Jewish community and
threatened friction early next week when he meets President George Bush and
members of Congress.

Although Mr Mandela's support for these 'fellow comrades' may be known abroad,
it will have come as a shock to many Americans watching a televised interview
with him.

Most have had limited exposure to the African National Congress deputy
president, who arrived this week to a hero's welcome in New York and was feted
as the 'living symbol of anti-apartheid.'

'Our attitude towards any country is determined by the attitude of that country
to our struggle,' said the 71-year-old leader. 'Yassir Arafat, Col Gadaffi,
Fidel Castro support our struggle to the hilt.'

Members of Congress are likely to be less indulgent now they have him on record
in the US supporting some of the chief bogeymen of US politics.

Mr Mandela had an enthusiastic reception, however, at the United Nations in New
York, where he later called for economic sanctions to be kept up against South
Africa until apartheid is destroyed.

He praised President F W de Klerk and his ruling party as 'people of integrity'
who would abide by any negotiated agreements.

But he said many whites, some in the army and police, were committed to
maintaining white minority domination. He also warned that other whites were
working 'at a feverish pace' to set up paramilitary groups 'whose stated aim is
the physical liquidation of the ANC, its leadership and membership.'

'South Africans freed in murder plot' case, Page 3


GRAPHIC: Picture, Nelson Mandela in Harlem, New York. He later called
YassirArafat a 'comrade in arms'

                   Copyright 1990 The Financial Times Limited

                             2679 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             June 19, 1990, Tuesday

Saddam threatens Israel for attacks on Arabs

BYLINE: VICTOR MALLET, Middle East Correspondent

SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 299 words

PRESIDENT Saddam Hussein of Iraq yesterday repeated his threat to attack Israel
in response to any Israeli aggression against Iraq or the Arab world, but he
denied suggestions that he wanted to launch a first strike. 'We say we will
strike them with all weapons we possess if they launch an aggression on Iraq and
the Arabs.' he said.

The message of last month's summit in Baghdad, according to Mr Saddam, was that
'he who strikes the Arabs... will be hit by all of us, each according to his

Western governments are likely to greet with dismay his latest declaration, made
at an international conference of Moslems in Baghdad.hey are already concerned
about increased Middle East tensions following the resurgence of Iraq after the
Gulf war and the creation of a hardline government in Israel this month.

Mr Saddam's implied threat to attack Israel if it attacks Arabs other than
Iraqis is particularly disturbing; this could be taken to include Israeli
assaults on the Palestinians in the occupied territories.

Yesterday President Saddam was critical of those who tolerate Israeli
expansionism and was adamant about the need to defend the rights of
Palestinians. 'Palestine for Palestinians,' he said. 'Al-Quds (Jerusalem) is for
us and not for the enemies of Islam.'

Although there may be an element of bombast in Mr Saddam's threats against
Israel, he has evidently decided to focus on the issue as a way of increasing
his standing in the Arab world, while trying to make peace on his eastern
borders by restarting the deadlocked peace talks with Iran.

Syria and Libya have contributed to the mood of tension in the Middle East in
recent days. At the weekend Col Muammer Gadaffi, the Libyan leader, urged his
people to build a nuclear bomb as soon as possible.


                   Copyright 1990 The Financial Times Limited

                             2680 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             June 15, 1990, Friday

Ban on Gatoil sale lifted


SECTION: SECTION I; International Companies & Finance; Pg. 20

LENGTH: 223 words

A GENEVA court yesterday removed the ban it had placed on the sale of Gatoil,
Switzerland's fourth largest oil company, to Tamoil (Suisse), a
Libyan-controlled consortium, for SFr201.25m (Dollars 140m), writes William
Dullforce in Geneva.

The court suspended execution of the sale shortly after it had been announced on
June 1 after rival joint bidders, Elf Aquitaine of France and Agip of Italy, had
protested that irregularities had occurred under the bidding rules laid down by
Gatoil's administrators.

Oilinvest, Tripoli, wholly owned by the state of Libya, holds 65 per cent of
Tamoil (Suisse), with the remaining 35 per cent held by Sasea, a Swiss
investment company with strong Italian links.

Sasea said yesterday that Tamoil had already taken all the steps necessary for
executing the takeover of Gatoil. Lawyers for Elf Aquitaine said they were
considering a further appeal.

Gatoil, which controls or has supply contracts with about 300 petrol stations in
Switzerland and owns its second biggest refinery, was put into the hands of
administrators after Mr Khalil Ghattas, its Lebanese-born owner, had been
arrested in March last year. He was later extradited to West Germany where he
faces charges of improper business practices laid by Klockner, a Germany company
which took a heavy loss on oil trading in 1988.


                   Copyright 1990 The Financial Times Limited

                             2681 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            June 13, 1990, Wednesday

The United Arab Emirates 3;
Crescent is a star - A regional base for foreign companies



LENGTH: 864 words

SINCE the oil-boom days of the 1970s, Arab countries - especially the Gulf
states - have jealously guarded control over their primary source of income.

Having nationalised the bulk of the assets of foreign oil companies, Arab states
established powerful state oil organisations, turning to western oil companies
as and when their expertise was required. In the process, the concept of
home-grown independent oil firms was left by the wayside.

So when the rulers of the small emirate of Sharjah signed an exploration
concession with a small US independent exploration and production company,
Buttes Resources, in 1970, they had little idea that they were paving the way
for the establishment of the first fully independent local Arab oil company.

Crescent Petroleum, the new consortium headed by Buttes to explore in Sharjah,
soon made a modest oil find at the offshore Mubarak field. Within 10 years the
consortium, which included Ashland Oil, Getty Oil, City Services and Kerr
MacGee, sold its assets in Sharjah to Mr Hamid Jafar, an ambitious young Iraqi
with a British public school education. He had been employed by Buttes to help
negotiate the initial exploration agreement with the local rulers, and had
headed the local operating company from the beginning.

Output at the Sharjah concession started declining in 1985, and since then Mr
Jafar has embarked on an ambitious expansion programme, aimed at turning
Crescent into an international oil company. From its base in Sharjah, Crescent
has started expanding its field of operations to other Gulf states and as far as
Yugoslavia and Canada.

'Crescent is the only privately-owned Arab oil producing company,' says Mr
Jafar. 'Our objective is to become a fully-fledged energy-related company
involved in exploration, production, marketing and trading. Our main area of
interest is in the Gulf and the Middle East.'

Mr Jafar sees Crescent's role as a small, integrated and independent company
with good regional contacts and able to move fast. With assets of close to
Dollars 700m, Crescent has enough financial clout to be taken seriously by most
governments in the region.

Indeed, Crescent has already signed a joint venture agreement with an unnamed
Gulf government to seek downstream acquisitions in the West. A team based in
London is on the look-out for investment opportunities in viable refining and
marketing concerns in Europe and the US.

Crescent has already signed exploration concessions in Egypt, Yugoslavia and
Pakistan. In Egypt, it is acting as operator in the East Khalda field, while in
Pakistan it has farmed out part of its share in two concessions to Amoco.
Crescent is now looking for more exploration rights in Yemen, Algeria and Libya.

But it is with Mr Jafar's home country of Iraq that Crescent has signed its most
important contracts. It recently signed a 'sponsorship services agreement' with
the Government for a new 215,000 tonnes a year aluminium smelter project at
Nassiriya, under which it will arrange financing and supervise the building of
of the plant. Under the deal with Iraq, Crescent has also agreed to buy all of
the smelter's export output, estimated at over half of total output.

Crescent, at the head of a consortium which includes US engineering contractor
McDermott and France's Entrepose, is bidding for a contract for the development
of the Luhais oil field in southern Iraq.

Last year, Crescent won a contract to build a Dollars 362m secondary refinery in
Karachi. The project involves the construction of a 1.35m barrels per day
hydrocracker and related units, which will be fed with fuel oil from two
existing primary refineries. The company is also has advanced plans for several
gas transmission facilities and pipelines in the Gulf, which it will build, own
and operate in areas where there is strong local demand for natural gas.

Mr Jafar believes that the next decade will provide a wealth of opportunity for
the private sector in the oil industry. Increasing worldwide demand for oil,
combined with an erosion of Opec's excess capacity, will lead to the need for
vast investments by producing countries to raise their capacity well into the
next century.

'Low oil prices in the 1980s have eroded the cash reserves of producing
countries,' he says. 'If you superimpose on that a worldwide tendency towards
privatisation, you can expect the major Arab producers to open up the oil
industry to outsiders.'

In Abu Dhabi, a small but significant move towards increased private sector
involvement in the oil industry has been under way since 1985, in the form of
Star Energy Corporation. Set up by a former director of marketing at the Abu
Dhabi National Oil Company (Adnoc), Mr Mussabeh al-Muhairi, Star has built up an
impressive petroleum products storage facility at Jebel Ali with capacity for 2m

The company also blends 15,000 b/d of unleaded gasoline, which it exports to the
Far East and to western markets, making good a severe shortfall of unleaded
gasoline capacity in the Gulf. Star is planning to build a new plant to produce
the non-lead chemical components needed for unleaded petrol, which at present it
is forced to buy in.


GRAPHIC: Picture, Sharjah, birthplace of the first fully independent localArab
oil company

                   Copyright 1990 The Financial Times Limited

                             2682 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             June 12, 1990, Tuesday

Fresh air blows into Bahrain SE


SECTION: SECTION I; International Companies & Finance; Pg. 34

LENGTH: 703 words

ABC's share offer will boost a young market, writes Peter Lieftinck

After several years in the doldrums, Arab financial markets are being given a
breath of wind by the first international offering of shares by an Arab
financial institution.

Applications for Dollars 350m worth of shares in the Bahrain-based Arab Banking
Corporation (ABC), the Arab world's flagship bank, close onhursday amid claims
from some of the local underwriters that the issue will be heavily

ABC aims to see its shares actively traded in both the Gulf and in Europe:ABC
will be quoted on the Paris Bourse and on Bahrain's fledgling stock exchange.
The issue, representing a quarter of the bank's equity, required a change in the
bank's articles of association to enable the sale of stock to non-Gulf citizens.
ABC is now owned one-third each by the governments of Kuwait, Abu Dhabi and

The issue will give an important boost to Gulf capital markets, according to Mr
Abdulla Saudi, the bank's president. As much as 80 per cent of the issue will be
sold to Arab investors, primarily in Saudi Arabia, Kuwait and the United Arab
Emirates. Foreign bankers in Bahrain say that particularly keen interest has
been shown by cash-rich Saudi investors.

'The shares have generated a lot of interest among our clients,' said an
official at Niscorp, an Abu Dhabi-based investment house which is a
sub-underwriter of the issue. 'Small investors have already paid up and larger
investors have committed themselves to buy shares.'

Nomura of Japan has applied for a broker's licence on the Bahrain Stock
Exchange, a move which is being seen locally as proof of the island's role as a
regional financial centre. In recent months Bahrain's standing has been shaken
by the decision of several offshore banking units, including Societe Generale,
to pull out of Bahrain.

Foreign bankers there are pleased by the ABC placing. 'It's a very welcome
development in the evolution of capital markets in the Arab world,' says Mr
Zakir Mahmood, Gulf regional manager at Bank of America. 'At present there are
too few investment vehicles for local investors.'

At ABC's headquarters in Bahrain, the Libyan-born Mr Saudi said the bulk of the
proceeds raised would be used to finance the creation of a new subsidiary bank
in Europe, which would be named ABC Europe. ABC has branches in London, Milan
and Paris, and important units in Spain - where it controls Banco Atlantico -
West Germany and Monaco.

Talks with the Bank of England on basing ABC Europe in London are advanced,
although Mr Saudi would not elaborate on his development plans for the

Although most of the cash will be deployed in Europe, ABC is using the share
issue to raise its profile in the Arab world. It has pitched the minimum
investment at Dollars 700 (for 50 shares) in an attempt to attract small
investors as well as large financial institutions.

Having achieved its ambition of becoming an international bank, ABC now wants to
develop its regional business. Last year it began a joint venture in Jordan
after buying a controlling interest in a local investment house called Jordanian
Securities, which it renamed ABC Jordan. It acquired a full commercial banking
licence, the first ABC venture in the Arab world to have done so.

In Bahrain, ABC operates as an offshore banking unit while its two other
offshoots, in Tripoli and Tunis, are representative offices. Mr Saudi says the
Jordanian deal, in which local investors hold a 40 per cent stake, will be
followed by similar moves in other Arab countries.

He is angered by criticism that ABC has gone ahead with the share placement
after having opted not to follow the Bank of England matrix on provisions for
less developed country debt.

The Bahrain Monetary Agency, the island's central bank, endorses the Bank of
England stipulations but has given institutions under its control until 1992 to

ABC's provisions absorbed all its profits last year, but still stand at 42 per
cent of Third World debt - well below the Bank of England minimum of 50 per
cent. 'It's our total means - assets, reserves and provisions - that matter,'
counters Mr Saudi. 'Our controlling interest in Banco Atlantico alone would add
a further 30 per cent to our provisions.'


GRAPHIC: Picture, Abdulla Saudi, wants shares to trade in the Gulf and Europe

                   Copyright 1990 The Financial Times Limited

                             2683 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             June 7, 1990, Thursday

Global view of a likeable hawk;
Book Review


SECTION: SECTION I; Letters; Pg. 25

LENGTH: 654 words

FIGHTING FOR PEACE by Caspar Weinberger Michael Joseph Pounds 18.99, 310 pages

So much in the world has changed in the past year or two that it is hard to
recall that Caspar Weinberger left the Pentagon less than four years ago. Mr
Weinberger was the US Defence Secretary for most of the Reagan Presidency. In
his own words, he helped the President bring about the 'rearmament of America.'
He believes in 'fighting for peace.'

Yet Mr Weinberger is an amiable man. There is a story about Mrs Takako Doi,
shortly to become leader of the Japan Socialist Party, going to see him at the
Pentagon expecting to meet a 'monster'. She went away surprised by how kind and
gentle he was. In defence terms, he is certainly a hawk, but not an ultra. He is
too intelligent to believe in the predatory use of force. He prefers negotiation
through strength.

He has written an interesting book, though you have to read it carefully to find
the insights. Its form is a problem. Chapters are divided into particular
incidents:the US intervention in Grenada, the bombing of Libya, the Falklands,
and so on - and these tend to be classified as successes and failures. Grenada
was a success; so was the air strike in Libya. The American participation in the
multinational force in the Lebanon was a failure. The attempt to trade arms for
hostages in Iran, with which Mr Weinberger had nothing directly to do, was a
disaster and 'very nearly politically fatal for the President.'

There were two longer-term successes. One was the American determination to go
on deploying intermediate range nuclear forces in Europe until such time as
Moscow stopped deploying its own and agreed to the INF treaty. The other was the
prolonged intervention, with allied help, to protect Gulf shipping lanes during
the Iran-Iraq war.hey showed the US had staying power.

Yet for the outsider, and presumably also for the practitioner, American foreign
and defence policies in the 1980s were not divided into chapters. Indeed,
reading between the set-pieces, the most remarkable impression that emerges is
how global American policy was - and how nuanced. This comes out clearly in the
Middle East, and Mr Weinberger can take some credit for it. He showed no
deference to Israel, which had policies he sometimes saw as a hindrance to
peace. He recognised the pivotal role of Syria.

Nor was Mr Weinberger's view of the world - in Mr Denis Healey's phrase - one of
global unilateralism. He was always looking for allies, aware that if the US did
not win support for its policies from abroad, it would be unlikely to get it at

There are some scathing comments on those who wanted to use force without
thinking of the consequences. Mr Weinberger cites Secretary of State Alexander
Haig as telling President Reagan early on that the US 'will have to invade Cuba
and one way or another put an end to the Castro regime.' Compared to some Reagan
team members, Mr Weinberger was a moderate.

The book has some omissions. For all his admiration of Mrs Margarethatcher, Mr
Weinberger forgets to say that she was not well pleased by the US invasion of
Grenada. And it is strange that a book about foreign and defence policy in the
1980s should make only passing references to Germany, and those mainly in the
context of INF.

Now that he is out of office, Mr Weinberger has reverted to his legendary
hawkishness. He does not think that the Soviet Union has necessarily become less
of a threat under Mr Gorbachev, and he deplores the annual decline in US defence
spending since 1987. 'Nothing in the world situation justifies four years of

Mr Weinberger was an effective Defence Secretary at the time. He should perhaps
have noted that the American defence build-up started in the later period of
President Carter, just as the move towards detente started in the later period
of Reagan. Not everything changes with a change of administration.


                   Copyright 1990 The Financial Times Limited

                             2684 of 2746 DOCUMENTS

                        Financial Times (London,England)

                              June 4, 1990, Monday

IRA hunts where security is weakest



LENGTH: 555 words

Irish terrorists may again kill troops, Kieran Cooke warns

TWO tersely worded messages, issued in the specially coded language of the IRA,
have come out of Dublin in the past seven days.

One apologised for what was called 'the tragic mistake' of the IRA murder in the
Netherlands of two Australian tourists mistaken for British military personnel.
The other carried no apologies.

Issued late on Saturday night, it claimed responsibility for the murder of an
army major in Dortmund, West Germany, and the gunning down of three soldiers on
a station at Lichfield in Staffordshire.

The 'army council' of the IRA, which probably co-ordinated the attacks from
Dublin, will be pleased with its week's work. Once again, the IRA has grabbed
the headlines.

The logic behind IRA actions is simple and deadly. In the words of Mr Danny
Morrison, former publicity director of Sinn Fein, the IRA's political wing:'If
the fatality rate of British soldiers rises, then the 'troops out' sentiment
rises in Britain and the closer we come to a resolution.'

The IRA's present campaign on the British mainland and on the Continent began
early in 1988. At that time, the IRA let it be known that it was in future going
to concentrate on military targets, in Northern Ireland and elsewhere.

In part that was a reaction to the adverse international publicity from several
botched operations in Northern Ireland resulting in civilian deaths, including
the Enniskillen bombing. It was also a recognition of the sad fact that deaths
of service people outside Northern Ireland reap far more publicity than killing
UDR men within the province.

From the IRA's point of view, it was also much easier to strike at so-called
'soft targets' - ranging from army bandsmen to military post sorting staff, to
off-duty soldiers on the Rhine, than to launch operations in Northern Ireland,
where security forces' intelligence has made terror attacks progressively more

From the beginning of its present campaign, the IRA has aimed to spread among
military personnel the fear of being attacked any time, anywhere. It has also
sought to intimidate anyone connected with the forces, issuing warnings not to
travel with forces personnel.

In 1987 and 1988, the IRA experienced several setbacks, including the shooting
of eight of its 'volunteers' by the SAS at Loughall in Northern Ireland - the
biggest single loss of life it had suffered since the Irish civil war of the

In early 1988, another three of its top operatives were killed by the SAS in
Gibraltar. Recent IRA attacks show that it has re-established an infrastructure
on both the Continent and England.

The security forces also admit that the IRA, whether in England or on the
Continent, now has access to considerable amounts of arms and bomb-making
equipment, part of the massive shipments that originated in Libya.

It includes not only large amounts of the Czechoslovak-made Semtex explosive,
light and odourless and therefore easily transportable, but large quantities of
sub-machine guns.

Police and military face a very difficult job in tracing IRA will
doubtless be calls for more international co-ordination to fight the IRA. There
will be increased security at military establishments everywhere. Yet the army
and the IRA know that no matter what precautions are taken, there will always be
another 'soft target.'


                   Copyright 1990 The Financial Times Limited

                             2685 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             June 2, 1990, Saturday

Palestinians to boycott US over veto of UN mission


SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 507 words

PALESTINIAN leaders in the Israeli-occupied West Bank and Gaza Strip said
yesterday that they were severing all contacts with US officials in protest at
Washington's veto of a proposal to send a United Nations investigative
commission to the occupied territories.

The contacts have been an important element in Washington's Middle East peace

The Palestinian boycott is a further blow to the faltering efforts to bring
about Israeli-Palestinian peace talks.

The proposal that a UN Security Council team should visit the West Bank and Gaza
and recommend ways of protecting the Palestinian residents followed violence
last week in which 17 Palestinians died in rioting after the killing of seven
Palestinians by an Israeli gunman. The plan was supported by 14 members of the
15-strong council, but vetoed by the US, which said the investigative team could
be 'misused to generate needless controversy and dispute in the area'.

In reaction, 50 Palestinians prominent in the intifada, the 30-month uprising by
Palestinians in the occupied territories, said in a statement that they would
boycott 'any official contact with the US Consulate and any American envoy and
we will not respond to any invitation to meet with any emissary'.

The group, which also said it was calling off a 13-day hunger strike staged to
demand UN protection, includes Mr Faisal Husseini.

Mr Husseini has met frequently with US officials to discuss attempts to achieve
talks between the Israelis and the Palestinians.

The US veto came as a welcome sign to the Israeli Government that recent sharp
differences with Washington over its policies in the occupied territories have
not yet produced a dramatic shift in the Bush Administration's policy.

This was reinforced by Washington's reaction to the failed seaborne attack on
Israel on Wednesday by Palestinian guerrillas from the Palestine Liberation
Front, a Palestine Liberation Organisation faction,

Israel is hoping that in the wake of the attack the US will break-off its
low-level dialogue with the PLO, begun in December 1988 on the grounds that the
organisation had renounced terrorism.

Mr William Brown, US Ambassador to Israel, said the issue was being looked at
'very, very seriously'.

The US expected Mr Yassir Arafat, the PLO leader, to condemn the attack, he

Maj-Gen Amnon Shahak, the Israeli Defence Force chief of intelligence, said in a
newspaper interview that the army had no information that Mr Arafat knew in
advance of the attack, as Israeli ministers have asserted.

He insisted, however, that a Libyan ship, crewed by Libyans with a Libyan army
officer aboard, carried the Palestinian assault team from the North African
coast to waters near Israel.

Mr Yehoshua Saguy, a former military intelligence chief and now a member of
parliament, suggested Israel might launch a retaliatory strike against Libya.

In Cairo, however, Mr Jaddallah Azzouz al-Talhi, the Libyan Foreign Minister,
said that Israel's claims of Tripoli's involvement were completely baseless.


                   Copyright 1990 The Financial Times Limited

                             2686 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             May 31, 1990, Thursday

Israel foils beach assault by Palestinian guerrillas


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 325 words

ISRAELI security forces intercepted two heavily armed bands of Palestinian
guerrillas yesterday as they attempted a sea-borne attack on Israel.

The assault, in which four guerrillas were killed and 12 captured, increased
demands for the US to break off dialogue with the Palestine Liberation

The Palestine Liberation Front, a PLO faction,

claimed responsibility for the attack. Israeli officials linked the unusually
large infiltration attempt with the Arab summit which ended in Baghdad

'It is not surprising that while the Arab countries declare war on the Jews'
right to immigrate to Israel, PLO terrorists try to assassinate Jews on Israeli
soil,' said Mr Moshe Arens, the Foreign Minister.

He called on the US to break off its dialogue with the PLO, opened by the Reagan
Administration in late 1988 on the grounds that the PLO had renounced terrorism.

In Washington, the US State Department said it was 'horrified at this terrorist
attack'. US officials said that Washington's dialogue with the PLO was in the

Implying that Israel had advance intelligence of the assault, Lt Gen Dan
Shomron, the Israeli Chief of Staff, said the attackers had set out from
Benghazi in Libya three days previously aboard a 'mother ship'. It had launched
six assault boats 120 miles off the Israeli coast.

He said only two reached the coast; the others broke down. Officials said they
believed the mother ship had headed for Port Said in Egypt - a potential
embarrassment for Cairo.

Troops killed four guerrillas and captured seven as they ran ashore from a
khaki-coloured boat mounted with rockets at Nitzanim, a popular beach between
Ashdod and Ashkelon which was filling up with Israelis celebrating a public
holiday. The boat had already been spotted and was chased ashore by a navy

Earlier, five guerrillas had been captured by the navy as they headed for the
shore at Ga'ash, north of Tel Aviv.


GRAPHIC: Picture, Israeli troops guard captured assault boat yesterday

                   Copyright 1990 The Financial Times Limited

                             2687 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            May 30, 1990, Wednesday

Bhutto takes Kashmir cause to the world


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 726 words

Pakistani President wants to avert war but may provoke it, writes David Housego

PRIME Minister Benazir Bhutto has embarked on a high-profile diplomatic
offensive over Kashmir which is intended to avert war with India - but which
could help provoke it. Last week she toured eight Moslem states - including
Iran, Turkey, Syria, Eqypt and Libya. She is soon to set off on another tour to
the Gulf and Iraq. She hopes to visit Europe in the late summer and plans to go
to the UN in September.

To an Indian Government already sensitive to what it sees as Pakistan's
exploiting its discomfort and which has warned Pakistan against
'internationalising' the issue, this is bound to seem a further act of hostility
- and one that strengthens the hands of the hawks in New Delhi.

Pakistan claims that India has moved 100,000 men and an armoured division into
the Rajasthan sector and deployed a further infantry division in Kashmir.

Ms Bhutto hopes to mobilise international opinion to prevent India's use of
force to suppress protest in Kashmir. The Pakistan Government attacked western
reticence to condemn India on human rights grounds when Mr Robert Gates, the
special envoy of US President George Bush, was recently in Islambad. Western
reticence means, says one official, that 'India feels that whatever it does in
Kashmir is not questioned. It feels free to go ahead.'

Ms Bhutto also hopes to reopen the status of Kashmir on the grounds that the
insurgency has demonstrated Kashmiris no longer want to be a part of India and
that a long-term solution must be found.

Mr Tanvir Ahmed Khan, the Pakistani Foreign Secretary says: 'If Kashmir
continued like this, with a crisis blowing up every six months or a year, it
would poison our relations with India. It would also mean large commitments to
weapons that would be disastrous to our economies.'

Diplomats in Islamabad take at face value Pakistani protestations that they have
nothing to gain from war. 'We don't want war and we have no purposes war can
achieve,' says Mr Iqbal Akhund, the Prime Minister's national security adviser.

The official line remains that the future of Kashmir should be determined by a
plebiscite. But officials are privately beginning to imagine other
possibilities, such as a UN trusteeship that might embrace both Pakistan and
Indian Kashmir.

Any proposal that envisages the separation of Kashmir from India is still
dynamite for Indian policy makers. The Indian view is that war is preferable to
a secession that would call into question India's identity as a secular state.

The shift to this more high-profile diplomacy reflects a mixture of domestic
pressures and an altered Pakistani perspective. Ms Bhutto has come under
criticism from the opposition for not being tougher on India. A more active
diplomacy has the support of all parties - enabling Ms Bhutto to build a
consensus on Kashmir that has evaded her on other issues. The change in tack
reflects Pakistan disillusionment that the meeting between Indian and Pakistani
foreign ministers in New York last month failed to achieve any improvement. The
decision to 'internationalise' the issue dates from the assessment then that
India had refused a dialogue.

Some Pakistani officials clearly see a more active diplomacy as strengthening
the hands of the small minority of policy makers in Delhi who believe that the
use of force in Kashmir will not work and that war should be avoided.

But at the root of the shift in tactics is an assessment that India is bogged
down in combating an insurgency that it will not overcome. This is 'a problem
they are not going to be able to solve,' Ms Bhutto said last week. The deep
Pakistani belief is thus that India will be forced to yield concessions on the
status of Kashmir. Senior Pakistanis confess themselves amazed at the pace of
events. Until November last year Pakistan increasingly accepted that Kashmir was
part of India. 'We had forgotten about it,' says a senator.

The refusal to abandon their belief in Kashmir's right to 'self determination'
is probably the bottom line for most Pakistanis.

Officials deny that support includes arms and training - though they concede
that arms find their way across the frontier. But Indian beliefs that the source
of their troubles lie in Pakistani support for the insurgency contribute to
fears that they are being driven into a corner from which the only escape is a
blow to the midriff.


                   Copyright 1990 The Financial Times Limited

                             2688 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            May 30, 1990, Wednesday

Digest of cases reported in the Easter Term;
From May 1 to May 11


SECTION: SECTION I; FT Law Report; Pg. 12

LENGTH: 1136 words

Davis and another v Richards & Wallington Industries Ltd and others (FT, May 1)

A contributory pension scheme was set up in 1975 and terminated in 1982 when the
company ran into trading difficulties and receivers were appointed. The trust
deed was silent as to the destination of the surplus of an estimated Pounds 3m.
The fund had been fed from employees' contributions, transfers from other
pension schemes and employer's contributions, all made under contract. Holding
that there was a resulting trust in favour of the employers, Mr Justice Scott
stated that equity should treat the employers as entitled to claim surplus, or
so much of it as was derived from overpayments. There was no express provision
excluding a resulting trust, and no circumstances from which such an implication
could be drawn. On the other hand, circumstances pointed to the exclusion of
resulting trust in favour of employees, who had contributed in return for
specific benefits, the value of which was different for each employee.
Legislative requirements, too, placed a maximum on the financial return for each

Midland International Trade Services Ltd and others v Sudairy and others (FT,
May 2)

Under three contracts, two of which contained an English proper law clause, the
plaintiffs provided finance to a Saudi Arabian company and then proceeded in
Saudi Arabia to enforce the defendant's liability on guarantees and promissory
notes under those contracts. The plaintiffs' efforts to enforce the orders were
unsuccessful and they served a writ on the defendant out of jurisdiction under
Order 11 rule 1(1). In refusing an application to discharge the writ, Mr Justice
Hobhouse stated that although there was an irregularity in the plaintiff's
supporting affidavit, the court was prepared to waive it. In Metall und Rohstoff
(1989) 3 WLR 563,581 Lord Justice Slade said that the Order 11 procedure was
designed to ensure that court and defendant were fully apprised as to the nature
of the legal claim and the documents in the present case satisfied those
criteria. Moreover, the Riyadh judgment was unimpeached and must be recognised
as a final decision of a court of competent jurisdiction giving rise to a
judgment debt so that there was no reason why Order 14 judgment should not be

House of Spring Gardens Ltd and others v Waite and others (FT, May 4)

Mr Waite had induced the plaintiff inventor of a bullet proof vest to impart all
the valuable information to the defendants on the strength of an oral agreement
that there would be a joint venture to supply the vests to Libya for an equal
share in the profits. In breach of the agreement, Mr Waite then signed a
contract for Pounds 5m with the Libyan army and manufactured the vests in
Ireland in secret. The plaintiffs launched actions in the UK and Ireland for
damages for misuse of confidential information and breach of copyright and
obtained judgment in Ireland for Pounds 3,474,570 plus interest. The defendants
then launched an unsuccessful action that the judgment had been obtained by
fraud. On appeal by one of the defendants, who had not been party to the
litigation concerning the fraud, the Court of Appeal stated that in the present
case all three defendants were joint tortfeasors and judgment against them was
joint and several. Further, it was not in the interests of justice and public
policy that the issue of fraud be litigated again once it had already been tried
and determined.

Micklefield v SAC Technology Ltd (FT, May 8)

The employee, Mr Micklefield, obtained an option to subscribe for shares in the
group's parent company. Clause 4.3B provided that if the option holder ceased to
be employed within the group for any reason whatsoever, then the option granted
would lapse. Nine days after the plaintiff stated that he wished to exercise the
option, his employment was terminated and he was told that the share option
ceased to be exercisable. Mr W J Mowbray QC, sitting as a deputy High Court
Judge, stated that the question was whether on the true construction of the
contract of employment and the share option scheme, he was entitled to recover
damages for loss of his option where, for the purposes of the preliminary issue
only, it was assumed that he had been wrongfully dismissed in breach of
contract. In the option scheme paragraph 4.3B referred to the status or
relationship, not to the contract. Mr Micklefield had ceased to be employed when
he was wrongfully dismissed within the terms of that paragraph even if some
other aspect of his contract might have continued in force.

Medway Packaging Ltd v Meurer Maschinen GmBH & Co (FT, May 9)

Meurer, a West German engineering firm, agreed to appoint Medway as exclusive UK
distributor of its drink and stretch-wrapping machines but Medway alleged that
Meurer appointed another company as UK distributor. In claiming damages for
breach of contract, Medway contended that the place of performance of the
obligation was in the UK under Article 5 of the Civil Jurisdiction Convention.
The present appeal was from a decision of Mr Justice Hobhouse, who refused to
set aside service of writ on Meurer in West Germany. In dismissing the appeal,
the Court of Appeal stated that the court was dealing with a repudiation which
consisted in (a) failure to give reasonable notice of determination and (b)
appointment of another UK distributor. Unless there was some provision to the
contrary, a requirement to give notice to an English company carrying on its
business in England had to be interpreted as an obligation to give notice at the
company's place of business in England, and that could be regarded as the
principal obligation in the case.

Indian Oil Corporation Ltd v Coastal (Bermuda) Ltd (FT, May 11)

In an award, the arbitrators found against the sellers who applied for an order
remitting the award pursuant to the court's power under section 22(1) of the
Arbitration Act 1950. The arbitrators' reasons had stated that the sellers'
defence could have been formulated in a less restricted way as there were
findings of fact which the evidence tended to support but were not amplified. Mr
Justice Evans stated that if the evidence before the arbitrators disclosed facts
which established a defence to the claim, but they failed to take account of
that defence because the legal issues were not correctly formulated in the
sellers' pleadings, there had been an injustice to the sellers which could be
remedied by remitting the award under section 22. Justice had to be applied in
the present context between two parties who had agreed their dispute should be
resolved by arbitration and that the award should be final but the power to
remit could and should be exercised when there was otherwise the likelihood of a
substantial miscarriage of justice.


                   Copyright 1990 The Financial Times Limited

                             2689 of 2746 DOCUMENTS

                        Financial Times (London,England)

                              May 25, 1990, Friday

Bhutto vetoes Kashmir self-rule


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 372 words

MS BENAZIR Bhutto, the Prime Minister of Pakistan, ruled out independence for
Kashmir as 'extremely dangerous' for the peace and stability of the

At the end of her tour of nine Moslem nations she said independence could
trigger off a 'balkanisation' which would be 'extremely dangerous to peace and
stability' and that it would 'undo the entire founding principles of the

Ms Bhutto made clear that her support for the self-determination of the people
of Kashmir was limited to a choice between joining India or Pakistan. She said
that Kashmiris wanted 'freedom from Indian occupation' and that a separate state
had never been envisaged at the time of partition.

Ms Bhutto has never before spelt out in public so clearly her opposition to
independence for Kashmir. Her remarks are bound to cause disappointment in
Srinagar where the main popular demand is for independence rather than union
with Pakistan. She also announced that Pakistan had the full support of Arab and
Islamic countries if attacked by India.

Ms Bhutto said she believed that a conflict was a 'real possibility' but not

Among the countries she visited as part of a new diplomatic campaign to enlist
support and understanding for Pakistan's case were Turkey, Iran, Syria, Eqypt,
Tunis and Libya.

Ms Bhutto is urging the Conference of Islamic Nations (OIC) to pass a resolution
on the Kashmir issue that would diminish the risk of war, restrain India in the
use of force within Kashmir, and endorse Pakistan's call for a negotiated

Several nations are believed to have told Pakistan that they declined to condemn
India because of their existing ties with New Delhi.

At the press conference Ms Bhutto used strong language to condemn human rights
violations by India in Kashmir. Referring to house-to-house search operations
she said:'If they see a young man, they take him out and shoot him - just shoot
him because he is young.'

Of last week's shooting by Indian security forces of at least 47 people
accompanying the funeral procession of Mirvaiz Maulvi Farooq, the senior Moslem
cleric in Srinagar, she said that it was 'deplorable that innocent people should
be slaughtered like this'.


GRAPHIC: Picture, Bhutto urging Kashmiris to choose between Pakistan and India

                   Copyright 1990 The Financial Times Limited

                             2690 of 2746 DOCUMENTS

                        Financial Times (London,England)

                              May 25, 1990, Friday

Bush extends US trade benefits for China


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 368 words

PRESIDENT George Bush of the US yesterday extended China's most-favoured-nation
trade benefits, brushing aside congressional criticism and defending his move as
in the best interests of the Chinese people.

The decision, which was expected, means that China will continue to receive the
lowest available tariffs for its exports to the US which last year reached
Dollars 12bn (Pounds 7.1bn), making China America's tenth largest trading

Mr Bush's decision may still face a congressional challenge as lawmakers draw up
legislation to force a repeal of China's MFN status. But Mr Tom Foley, House
Speaker, said yesterday that he doubted whether opponents could muster the
necessary two-thirds majority in both houses to override a veto.

Mr Bush said the decision to extend had been difficult, in the light of the
Chinese government-ordered massacre of pro-democracy demonstrators in Tiananmen
Square last June. But he had received support from Taiwan, Singapore, Japan and
Hong Kong which stood to lose a great deal as the main entrepot for US-China

In answer to a question, he said: 'I don't think this is a reward for Peking,'
adding:'Isolation is bad, economic involvement is good. Economic contacts are
the best way to keep the economic reforms going.'

Revoking MFN status for China would have produced tariffs of up to 60 per cent
on Chinese goods such as toys and textiles. According to the White House, it
would almost certainly have forced the Chinese to retaliate, producing higher
duties on Dollars 1.1bn in US wheat sales, and an estimated Dollars 1bn in
aircraft and aerospace equipment. It would also have affected millions of
dollars of US'made computers, cotton, timber, and paper products, as well as
fertiliser and acid.

Mr Bush noted that existing sanctions against China remain in place.hese include
a halt on World Bank loans, a suspension of military sales and a freeze on eased
technology exports.

Early predictions that Mr Bush would face significant opposition to renewing MFN
- which is enjoyed by countries such as Libya and Iraq - appear to be wide of
the mark. The President kept most Republicans on board, while congressional
Democrats are divided.


                   Copyright 1990 The Financial Times Limited

                             2691 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            May 23, 1990, Wednesday

ABC offers 25m shares at Dollars 14 each

BYLINE: STEPHEN FIDLER, Euromarkets Correspondent

SECTION: SECTION I; International Companies & Finance; Pg. 31

LENGTH: 116 words

ARAB BANKING Corporation (ABC), the Bahrain-based international bank, has priced
its international offering of 25m shares at Dollars 14 each, Credit Suisse First
Boston said on behalf of underwriters.

The offering, fully underwritten by 34 international institutions, will raise
about Dollars 325m after fees and expenses.

ABC, the first Gulf-based institution to offer shares to non-Arab investors,
plans to list the new shares on the Bahrain, Kuwait and Paris stock exchanges.
ABC is currently one third owned by the governments of Kuwait, Abu Dhabi and
Libya. After waiving their pre-emption rights in order to allow the issue to go
ahead, they will each have a one-quarter share.


                   Copyright 1990 The Financial Times Limited

                             2692 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             May 22, 1990, Tuesday

Indian troops fire on mourners


SECTION: SECTION I; Back Page; Pg. 22

LENGTH: 440 words

INDIAN security forces opened fire on a crowd of 100,000 mourning the death of a
senior religious and political leader in Srinagar yesterday. Between 80 and 100
people were reported to have been killed and more than 300 injured.

Witnesses said the deaths occurred when security forces opened fire on people
trying to break through their cordons around the body of Mirwaiz Maulvi Farooq,
a Moslem priest.

Militants in Pakistan, where tension is already running high over the Kashmir
dispute, are likely to be enraged by the the priest's killing and the shooting
by Indian soldiers.

Yesterday's deaths marked the worst day of violence since January when the state
was brought under direct rule from Delhi following demonstrations by Moslem
militants. Doctors put the number of dead as high as 100.

Maulvi Farooq, 45, was shot by three men at his house on the outskirts of

There was no firm evidence of who the killers were, but some accounts in New
Delhi suggested they were members of the Hezb-i-Mujahideen, the most
fundamentalist of the Moslem militant groups, who opposed him both for his more
moderate religious views and for his alleged contacts with the Government.

However, some Srinagar residents claimed that the killing could have been done
by Indian forces in a bid to discredit Moslem militants.

Earlier in the day Ms Benazir Bhutto, the Pakistani Prime Minister, in Libya on
a tour of Moslem states to enlist support for Kashmiri self-determination,
condemned the Moslem cleric's death. She said she was profoundly shocked at the
'dastardly assassination.'

Although Maulvi Farooq was a Kashmiri nationalist he did not go as far as the
fundamentalists in demanding the closure of liquor shops, cinemas and the
compulsory wearing of the veil by women.

In the wake of the killing, followers of Maulvi Farooq marched on the
headquarters of the Jamaat-i-Islam, the outlawed extremist movement and parent
organisation of the Hezb-i-Mujahideen. The authorities reimposed the curfew in
Srinagar after the demonstration.

Maulvi Farooq had the influential role of leading the Friday prayers in the main
mosque in Srinagar each week and preaching to the congregation. As a politician,
he led a pro-Pakistan movement in the 1960s, formed an alliance with Dr Farooq
Abdullah, the former Chief Minister in 1983 and then broke with him three years
later when Dr Abdullah allied with the Congress party.

A further reason for the killing of Maulvi Farooq seems to have been the desire
of the Hezb-i-Mujahideen to impose a more fundamentalist preacher on the Friday
Mosque, the main centre of prayer in Srinagar.


                   Copyright 1990 The Financial Times Limited

                             2693 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             May 19, 1990, Saturday

A beaten, tortured people



LENGTH: 2059 words

Burma's anti-intellectual regime has subjected the country to years of
suffering. Roger Matthews reports

EVEN IN a world hardened to political injustice and cynicism, the sufferings
visited on the people of Burma by the country's regime would surely raise an
outcry if they were more generally known.

In the past two years the Burmese regime has recognised almost no limits to the
excesses it will perpetrate to retain power. Worse still, the present fiercely
anti-intellectual regime appears to have convinced itself that it has a national
monopoly of what is right, just, and patriotic.

Amnesty International's report on torture in Burma published earlier this month
was shocking even by the standards of its often gruesome reports.

It showed that civilians picked up and interrogated as political detainees were
routinely tortured. Former detainees frequently described walking on the knees
on sharp gravel - known as walking the seashore - and 'motor cycle riding'
entailing squatting for prolonged periods in a position suggesting driving a
motor cycle.  Some described prolonged standing in water, prolonged exposure to
sun or to intense cold, burnings with cigarettes, rolling of iron or bamboo rods
or bottles along the shinbones until the skins scrapes off, near drowning
through immersion in water, hanging by the feet from a ceiling fixture or a
rotating fan (the helicopter) and beatings with whips and clubs while suspended.
Salt, salted water, urine and curry powder have been applied to open wounds
after whippings or shallow cuts with a knife.

Many others did not report anything because they did not survive.

The regime's disregard for world opinion now seems the more remarkable in the
improved political atmosphere emerging elsewhere, particularly in Eastern

Perhaps the world could be forgiven for forgetting one of its 10 poorest nations
wilfully isolated for most of its 42 years since independence from Britain. It
has not sought a nuclear capability, chemical weapons, or a 'super gun' like
Iraq; it has not tried to infect conservative neighbours with religious and
revolutionary fervour like Iran; financed terrorism like Libya; or threatened
international aviation and the Olympic Games like North Korea. Instead, all the
misery which a government could contrive has been heaped upon its own people.
This misery has only deepened since the 40m people of Burma decided two years
ago that they could tolerate it no more. As a final mockery of liberal opinion,
the regime intends to hold what it calls a free general election at the end of
this month to legitimise its misrule. Since September 18, 1988, Burma has been
ruled by the State Law and Order Restoration Council, or Slorc, an aptly
unpleasant acronym. Slorc's first act on September 19 was to shoot, kill and
wound thousands of peaceful demonstrators, an act as bloody and outrageous as
the much better publicised slaughter of unarmed students in Peking'siannanmen

The overthrow of tyranny in Romania 15 months later, was denied the people of
Burma. In their tragic case,no television cameras were on hand to beam the
events to a horrified world audience.

Since then, the world has known even less about what was happening in Burma.
After a short, unhappy flirtation with the international media, Slorc has again
shut the country away from the eyes of the world and has become far more

From 1962 when General Ne Win overthrew the democratically elected government of
Prime Minister U Nu, the history of Burma has been one of inertia and decline.
Under the xenophobic policies of the nominally disbanded Burma Socialist
Programme Party, the country was transformed from one of the most affluent in
Asia to one of the very poorest. This was the personal achievement of General Ne
Win who, although he no longer holds a title, is deemed at age 78 to be as
influential in Burma today as is Deng Xiaoping in China.

But instead of presiding over decline, it increasingly appears that Ne Win's
henchmen are positioning themselves to preside over disaster. In the past they
merely prevented change. Now they have begun to initiate changes of a highly
unpleasant sort. At first, their actions were mainly cosmetic. They sought to
rinse away the blood stains by repainting Rangoon and changing the name of
country and capital, to Myanmar and Yangon respectively. Far more frightening
has been Slorc's subsequent vindictiveness coupled now to its visions of the

Immediately after the killings, executions and purges in the autumn of 1988, the
only visions Slorc pretended to see were those which would lift the economic
boycott imposed by almost all industrialised nations, including Japan.

With international indebtedness standing at more than Dollars 4bn, reserves of
probably less than Dollars 20m, exports at a standstill and scarcely enough
bullets for the soldiers' guns, the regime would have promised anything - which,
by its standards, it did. Multi-party elections, it claims, are to be held on
May 27 while, equally theoretically, a modern market economy is in the making.

But as Slorc has gained confidence in its ability to survive, so it has bothered
less about external credibility. Consider, for example, Slorc's version of the
conditions under which it says free and fair elections will be held. It is has
arrested and still holds key opposition leaders and thousands of party

Amnesty International has reported in detail on the widespread use of torture in
Burma's jails, from which the regime admitted that 18,000 criminals were freed
to make way for political prisoners. Summary military tribunals have replaced
civilian courts and have the power to impose the death penalty. Slorc forbids
gatherings of more than four people. It denies freedom of speech.

Each political party is allowed one brief election address which has to be
submitted in advance for censorship. No criticism of Slorc or the armed forces
is permitted. No complete list of candidates has been published. No complete
list of results - just the winners - will be released, and that will not be done
until three weeks after the poll.

Finally, no-one knows to what assembly the candidates are to be elected and
when, if ever, the Slorc is to handover power. If any party is to be declared
victorious - and Slorc appears to detest them all - it will probably be the
regime's National Unity Party.

Obviously, therefore, the May 27 elections will not produce a government which
has broadly-based popular support - a key condition set by Japan, by far Burma's
largest aid donor, for resuming its Dollars 250m a year programme. Work has
restarted on seven of the 18 projects with which Japan was involved prior to
September 1988, but and costly, such as the extension of Rangoon airport.

This matters less to Slorc than it would have done 18 months ago. It has since
found easier, quicker ways of making money without subjecting itself to the
irritation of demands for realistic exchange rates or foreign investment

The fastest dollars have come from the despoliation of natural resources. Burma
has in the past zealously guarded its magnificent teak forests which today
account for about 75 per cent of world reserves.

Now they are being destroyed at an alarming rate as 18 logging companies from
Thailand - almost barred from operating in their own country because of massive
deforestation - are racing to exploit the poorly-policed and highly lucrative
contracts awarded by Slorc in its quest for hard currency. International oil
companies, well-practised in working with nasty regimes, were also quickly on
the scene. Nine onshore and two offshore exploration licences have been signed.

Less visibly, but probably no less effectively, fishing vessels fromhailand and
other nations are sweeping the seas of fish within Burma's territorial waters.
Even more darkly, there is said to be increasing evidence that Burmese officers
have become substantially more involved in the booming heroin trade. US
officials believe that Burma's opium crop has soared from around 850 tonnes in
1987 to nearly 2,000 tonnes last year. But the centre piece of Slorc's
fundraising has been the sale of part of the land on which its Tokyo embassy
stands for a reported Dollars 250m. All of this has given Slorc greater self
assurance, especially in its capacity to buy the continued obedience of the
armed forces.

It has also made the regime more aggressive. In order to ensure a steady flow of
teak logs into Thailand, the Burmese army has in the past 18 months mounted a
series of assaults on the Karen people along the Thai border. The rag-tag Karen
guerilla units have been struggling for autonomy from Rangoon for more than four
decades, but have never faced such a determined military assault, as witnessed
by the swelling numbers of refugees pouring across the border.

Caught up with them are some of the thousands of students who fled Rangoon in
autumn1988. Higher education has been at a standstill in Burma for nearly two
years with no sign that Slorc will risk reopening the universities. So, the
future for the country's brighter youngsters is especially bleak.

But this is not the worst. A new harshness and cruelty has been witnessed over
the past few months. The dealings of Slorc and other military officers with the
public has reached a new level of cruelty in the past few months. It was common
for young men to be snatched from the street to act as porters for the army. But
their subsequent treatment has been shocking, with the sick and injured left to
die in the jungle. As people became more adept at dodging military snatch squads
new tactics have been employed. Now troops seize women and children and swap
their freedom for a cash ransom or the service of their husbands or fathers with
the military.

The number of such snatches has not been large but the number of urban dwellers
singled out this year for Slorc's particular attention has been very large.
Western diplomats in Rangoon jointly estimate that anything up to 500,000 people
have been forcibly evicted from their homes and dumped, without any preparation
or facilities, in shanty areas around Rangoon and the second city, Mandalay. The
regime appears to have been motivated in part by revenge, as many of the areas
which have been razed were especially active centres of opposition to the
regime. Greed was also there, with some of the best sequestrated land about to
be developed for military housing.

Most ominously, in the longer term, appears to be the half-formed notion in
Slorc's mind that it can usefully order large movements of population as part of
some future grand design for the country. Last month it announced that it was
going to construct a futuristic city south of Rangoon at an initial capital cost
of Dollars 15bn. It is supposed to be constructed by a consortium of more than
200 Japanese companies, take the next 15 years to build and to house 4m people.

The temptation is to laugh. But reports reaching embassies in Rangoon say that
many hundreds of people forced out of the city are suffering from malnutrition
and malaria. With limited shelter, transport, medical facilities and food
supplies, diplomats fear the death toll could rise sharply.

Diplomats suppose, but cannot cite evidence, that not all members of the Burmese
armed forces are entirely happy with what is happening. Aung San Suu Kyi, the
country's most popular opposition leader who has been under house arrest since
last July, tried hard in her public speeches to differentiate between the mass
of soldiers and the repressive few at senior command level. It is a distinction
which the public may find increasingly hard to make.

General Saw Maung, chairman of Slorc and Minister of Defence and Foreign
Affairs, remains nominally in charge of the country. But there is little doubt
now that it is Brigadier General Khin Nyunt, head of military intelligence, who
is - as the Burmese colourfully put it - 'breathing through the nostrils of Ne
Win.' At a relatively youthful 51, he speaks, as one diplomat said, 'with the
arrogance of unchallenged power.'

A challenge might, just, still explode again from within Burma. But it would be
at enormous cost. As the Burmese people may well have concluded, opponents of
Slorc have little reason to expect much support, other than occasional verbal
encouragement, from the outside world. Pity poor Burma.


GRAPHIC: Map, no caption; Picture, no caption; Picture, Looking down the barrel
of a gun, the constant fate of thepoverty-stricken, Burmese people under a
vindictive regime

                   Copyright 1990 The Financial Times Limited

                             2694 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             May 19, 1990, Saturday

Italy in Focus - Ah . . . a lifetime of affairs



LENGTH: 1500 words

Alan Ponsford admits to serious flirting - with Italian islands

IT MUST have rained in the night. If not, it is going to. Thus we prescient
locals sagely greet the three broody blobs that now and then pop up like
cardboard cut-outs on our southern horizon. Here, at their nearest point on the
mainland, in my Italian hideaway near the foot of Monte Circeo, I am content
that they should lurk behind the flimsy haze that usually lies across the 20
miles of Mediterranean between us:it serves to smother the gusts of bitter-sweet
nostalgia from Memory Lane, Ponza.

That is the island in the middle, the long one, flanked by two humps - to the
right (the west, that is) Palmarola, to the left, Zannone. Beyond them, half-way
to the Bay of Naples, squats the fourth of the Pontines, Ventotene, with its
tiny satellite, Santo Stefano.

I have had a lifetime of memorable affairs with Italian islands. In my callow
youth I flirted with Capri and Ischia, but even then found their undoubted
charms somewhat tarnished because they had to be so widely shared. After an
infatuation with rolling, green Elba, I began to form my lasting relationships
with the more humble isles that micro-dot Italian waters.

For years I flitted promiscuously from one to another, always returning,
however, to my first love, Ponza, and occasionally to my second string, Giglio.
Though each has its own personality, most of these rocky outposts have many
blessings in common:unspoilt ruggedness - multi-coloured by centuries of
volcanic convulsions, yet softened by a clothing of aromatic bush - secluded
coves, translucent clear sea and modest settlements of colour-washed houses that
embrace ample, unpretentious facilities that enable visitors to sleep, eat and
drink well.

Happily they undergo little change, even though they are invaded in high summer,
especially during the traditional August holiday. So they retain a refreshing
remoteness, free of high-rise and grand hotels, unexploited by tour operators,
little known to foreigners.

Yet they are generously served from the mainland by an extensive network of big,
powerful boats and hydrofoils. I once spent a balmy summer night sleeping
intermittently on the steel deck of a boat from Naples to Lipari, the largest of
the Aeolian Islands. They are much less painfully reached from several ports on
their mother island of Sicily, off whose north coast they are scattered. But my
cricked neck and aching back were amply compensated for by the enchantment of
swishing quietly into the hushed harbour of Stromboli in the first flush of
dawn. The dominating, still-active volcano, its top catching streaks of sunrise,
added to the feeling of awe. Panarea, Salina, Vulcano, Filicudi and Alicudi
complete this lovely archipelago.

North of Palermo, Ustica is a blend of green cultivation and volcanic grey. It
is now a marine reserve, long since released from its sinister role as a place
of exile for opponents of the Fascists.

Off the western tip of Sicily the three Egadian Islands are served fromrapani.
The serenity of these islands has an overlay of that dusty, grave, mildly
sinister ambiance that many travellers to Sicily find fascinating. But those to
the south, Pantelleria and the two main Pelagian islands of Linosa and
Lampedusa, have more of the feeling of nearby North Africa. These are places
thought of by knowing Italians as almost sub-tropical retreats. Baked during
long summers, their greenery has had to give way in places to stretches
resembling the deserts of Libya and Tunisia. After the bombing of Tripoli and
Benghasi, Colonel Gadaffi took a few pot-shots at Lampedusa, but missed.

On the calf of Italy, the generally unexciting eastern coast is relieved by the
spur of the Gargano, which is uncharacteristically verdant. The gentle hills are
pine-clad and seem to have shed identical pieces to form the Tremetis,
reportedly still nearly as tranquil and untouched as I remember them 25 years

Although massive Sardinia hardly qualifies for my collection, I did once make a
pass at its little subsidiary of San Pietro, nudging its bottom left-hand
corner. In the pleasant resort of Carloforte I booked a two-week family holiday
in July. The dividing channel is renowned for an annual migration of tuna, which
the local fishermen harvest in huge numbers. But its water was so cold that we
retreated to our beloved Pontines for the second week.

Ponza has a flavour and a rhythm all its own. Being so accessible to Rome and
other flourishing parts of Lazio, it has had an unobtrusive dash of
sophistication and style injected into the customary informality and indolence
of life. Moreover, it boasts a stunning, amphitheatrical port, where most
activity is concentrated. Around it rise tiers of flat-topped houses, mostly
white and deep rose pink, but some tinted in delicate shades of cream, yellow
and even blue.

The encircling harbour wall is double-decked, the upper layer a traffic-free,
cobbled promenade. To the lower one are tied a mass of assorted craft, with the
traditional blue and white fishing boats jam-packed among all sizes of visiting
sailing yachts and motorised gin palaces.

Boats and rocks are what daytime Ponza is essentially about. The island, five
miles long and nowhere more than a few hundred yards wide, has few sandy
beaches. But its contorted coastline is beautifully dramatic and subtly
coloured. Centuries of explosions, eruptions, lava flows and general battering
have left towering white cliffs stained with golden-brown patches encrusted with
tufa and magma.

Of a summer's morning, visitors stream out of the harbour in small craft. With
their picnics of crusty bread, prosciutto and wine, they make for a favourite
inlet, strip of gritty sand or rocky perch, leaving the town virtually deserted
by mid-day.

After a long absence I have been back to a Ponza I never knew. Neither the
dazzling Chiaia di Luna Hotel, its luxury pool nor its superb, delicate cuisine
were in our bracket through all those years. The nearest we got was the ancient
Romans' tunnel that passes almost beneath the hotel to the long, shingle beach
from which it takes its name.

The scene we knew was viewed from one of the plain but adequate rooms of the
Mari, above the quay. There we would watch the procession of boats coming home
in the late afternoon, when the port is bathed in a radiant pink glow. Now, as
then, the labyrinth of alleyways spill out the cast of the early evening
passeggiata - arm-in-arm, casual-smart and harmlessly posturing, the more so at
weekends when the Romans come in force. Few eat dinner in one of the handful of
unassuming hotels; in fact, many stay in private houses. They throng the
pavements and terraces of a dozen simple restaurants for freshly-landed seafood.

Ponza's neighbour islands are quiet and less visited. Boatmen run day trips to
Zannone and Palmarola. Both are uninhabited except for migratory birds and, on
Palmarola, a few recluses who occupy a beehive of caves in summer. The more
distant Ventotene is immensely picturesque with a strong Neapolitan influence in
its character. Mariners tie up in an ancient Roman port. The island is famous
for lentils and, like its diminutive off-shoot, Santo Stefano, for the exiles of
many ages who made involuntary visits. Santo Stefano's prison fortress has lain
abandoned for 25 years.

Among those who know both Ponza and Giglio (pronounced Jeel-yo) there are those
who prefer the latter. They find it more natural, its scenery greener and more
mellow. It is certainly a lovely island, perhaps at its best in May when it is
in full bloom with wild genista, broom, rosemary and capers.

It, too, has an attractive harbour, this one fringed by a dusty beach punctuated
by restaurants jutting out from the quayside on stilts. Returning last year, I
found that the tight restraints on development were still preserving the strong
spirit of Tuscany in the terracotta buildings and their low-pitched, tiled
roofs; white-painted houses are discouraged. Nothing had changed in the
Castello, the medieval walled village plastered on the mountain-top.

At the far end of the island, Campese had been allowed to grow a bit around its
beach and Medici tower. In this bay a few years ago an Oxford archaeologist
named Mensun Bound found the wreck of a 2,500-years-old Etruscan trading vessel
and recovered a wealth of treasures from her. It was reckoned to be the oldest
shipwreck ever discovered.

Even in September there were lots of BMWs and Mercs helping to clog the port and
Campese. Germans and Swiss find it easy to drive down to Porto Santo Stefano, 80
miles north of Rome, for the ferry to Giglio, but it remains little spoilt.

Ferries operate to Ponza - a few also to Ventotene - from various mainland
ports. In summer there is now a catamaran from the port of Fiumicino, near
Rome's main airport. But my favourite route is still by train or bus from
central Rome (or taxi from the airport) to Anzio for a lunch of pasta and
shellfish on the quay before catching the afternoon hydrofoil.


                   Copyright 1990 The Financial Times Limited

                             2695 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            May 16, 1990, Wednesday

South Korea 9;
Construction industry not as happy as it seems



LENGTH: 1207 words

Ian Rodger examines the apparently golden future of building

KOREA's construction industry is probably the envy of its peers these days, with
a booming home market and sharply improving prospects in its prime overseas
market, the Middle East.

The home market, which was widely forecast to collapse after the 1988 Seoul
Olympic Games, has bounded ahead. Total contract awards last year were up about
50 per cent to won 15,000bn, according to the Construction Association of Korea,
and further robust growth can be expected for at least the next couple of years.

Orders from abroad, too, are set to soar this year, as oil prices rise and
reconstruction in Iran and Iraq gathers momentum. The year got off to a great
start with the signing of a mammoth Dollars 5.5bn contract between Dong Ah
Construction Industrial and the government of Libya for the construction of the
second phase of the Great Man Made River Project (GMR).

However, in spite of this favourable near-term outlook, all is not well in the
industry. Contractors are finding that higher labour costs and a paucity of
sources of easy finance are squeezing their once formidable international

At home, labour unrest and shortages have pared margins. As with many other
export oriented industries in Korea these days, there is a certain amount of
alarm about whether the miracle is ending.

'The situation is serious,' said Chung Hoon Mok, president of Hyundai
Engineering & Construction, the largest Korean contractor. While there were 85
contractors licensed to work abroad in the early 1980s, he said, fewer than 27
now remain, 'and many of them do not have much new work abroad.'

The Korean construction industry startled the world a few years ago by rising
near to the top of some league tables of international contractors. Using a
combination of cheap labour and tough management, Korean contractors, who had
built up their expertise during their own country's rapid industrialisation in
the 1960s and 1970s, muscled in on the big civil engineering markets in
developing countries, especially the Middle East,in the late 1970s. In 1981,
they bagged Dollars 13.7bn in orders from the Middle East, the second largest
volume for any country.

Since then, unfortunately for them, things have got tougher. The decline of oil
prices and the Iran-Iraq war drastically curbed construction activity in the
Middle East as the decade progressed. Last year, the Korean industry took only
Dollars 1.4bn in orders from the region.

A more serious problem has been the loss of competitiveness of Korean labour.
There was a time when Korean workers would put up with low pay and primitive
living conditions just to secure work on a construction site abroad.

No more. According to a Ministry of Construction official, Korean workers now
insist on decent housing and and have successfully bargained for relatively high
wages. The average monthly wage for overseas Korean construction workers is now
Dollars 1,700 per month.he result is that Korean contractors have begun hiring
other nationals, mainly Filipinos, Bangladeshis and Pakistanis, who are willing
to work for much lower wages - about Dollars 650 per month - and live in
primitive conditions. At the peak in 1982, there were 270,000 Koreans working on
construction sites abroad; today there are only 17,300, and the Korean
contractors are employing 40,000 nationals of other countries.

Among other things, this change means overseas contracting is of considerably
less value to the Korean economy than it was, although so far there is no sign
that the government is becoming less interested in it. However, there is some
grumbling among contractors that the government is not providing enough sources
of finance for overseas construction projects at a time when finance is becoming
an increasingly vital element in the competition for contracts.

The contractors have been dismayed, for example, to find that in Iran and Iraq,
where they worked on projects faithfully through the war, the authorities are
more interested in cheap finance for their rehabilitation projects than in
rewarding Koreans for their loyalty.

The contractors are trying to get out of their predicament in a number of ways,
mainly by diversifying the source of their overseas contracts and by trying to
increase their technological capability. A handful of companies have managed to
get licenses in Japan and are patiently trying to establish themselves in that
most difficult market.

The main challenge for the contractors, said Mr Chung, is to improve management
skills. 'We have to retool our organisations so we pay attention more
systematically to the financial aspects of projects rather than just
engineering. We live in a period when foreign exchange rates are changing all
the time, conditions in financial markets change and host governments change
regulations with little notice. We have to be much sharper.'

The leading companies are spending more on training and are recognising that, as
they move into higher technology areas, they can no longer aspire to be all
things to all people. Instead, they must learn to carry out projects in
co-operation with other contractors who have expertise in special areas.

All these pressures are less apparent in the domestic market where industry
leaders frankly admit that the possibility of foreign competition is virtually
nil. 'In principle, the market is open, but there are many conditions that have
to be fulfilled to get a licence,' said Mr Jin Mo Gu, director of the planning
and co-ordination office of the Construction Association of Korea. So far, not
one foreign company has a licence.

The domestic market has also become more important to contractors in recent
years, and now accounts for more than three quarters of the industry's total

As one might expect of a rapidly developing country, the market is still
strongly oriented to civil engineering. The construction of roads, bridges,
dams, power plants, airports, railways and the like accounted for more than a
quarter of contract receipts in 1988. Housing, including residential shops,
accounted for 20.2 per cent, factory construction for 15.5 per cent and office
and commercial building for 10.7 per cent.

The government, which has found its budgetary situation much stronger than
expected in the past couple of years, has committed itself to maintaining a high
pace of activity. Three new airports, a high-speed rail line between Seoul and
Pusan and new subway lines in Seoul will keep many contractors busy in the next
few years.

Also, the private sector is stepping up its capital spending in an effort to
overcome the negative effects of the stronger won. Domestic construction orders
are expected to reach won 330,000bn this year, up about 12 per cent from 1989,
and the CAK is forecasting an average annual growth rate of 10 per cent over the
next decade.

The industry's biggest problem at home may turn out to be a labour shortage. The
CAK estimates the shortfall this year at 9,000 people, rising to 103,000 by

The association admits bluntly that this is because of poor working conditions
at job sites and the high risk of industrial accidents, all of which suggests
yet another challenge in the time ahead for company managers.


                   Copyright 1990 The Financial Times Limited

                             2696 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            May 16, 1990, Wednesday

US urged to strike air terrorist bases;
Lockerbie bomb commission demands tougher action from Bush


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 736 words

THE US should consider military strikes against countries which harbour air
terrorists, a presidential commission report on the Lockerbie bombing said

The report urges the US to prepare 'pre-emptive or retaliatory military strikes'
against known terrorist enclaves and to consider covert operations as a second
best option. It calls on President George Bush to be more vigorous in pursuing
and punishing state sponsors of terrorism.

The White House reacted cautiously, saying it needed time to consider the
recommendations, which include a new national system for notifying passengers of
credible bomb threats and a halt to installing expensive plastic explosive
detectors in airports, saying more testing is needed.

A White House official said the US had reacted strongly when there was a
'smoking gun' linking countries to terrorist acts, as in Libya in 1986, but he
cautioned:'It's a little more difficult two years after the event.'

Dr Jim Swire, spokesman for UK families who lost relatives in the bombing, said
military strikes against terrorists would only perpetuate a cycle of violence.
He called instead for economic and diplomatic sanctions against countries
supporting terrorists.

President Bush set up the seven-member commission last August to investigate the
bombing of Pan Am Flight 103 over Lockerbie, Scotland, on December 21, 1988
which killed 270 people. The decision followed complaints by relatives of the
victims about suspected security breaches.

The commision is critical of the US Federal Aviation Administration, the body
responsible for air safety, accusing it of being 'reactive.' It also says Pan
Am's security procedures at Frankfurt, where the doomed flight originated, were
faulty before the bombing - and nine months thereafter.

However, the report concludes that while tighter baggage checks might have
prevented the bombing, it could not be certain 'that more rigid application of
any particular procedure actually would have stopped the sabotage of the

Mrs Ann McLaughlin, the former Labour Secretary who chaired the panel, said
terrorists were able to place a bomb on Pan Am 103 'because the aviation
security system failed. The system was flawed and did not provide an effective
defence against sabotage.'

The report goes further, stating that the US civil aviation system 'is seriously
flawed and has failed to provide the proper level of protection to the
travelling public.'

Admiral James Busey, FAA administrator, disputed this. 'The system was flawed,'
he said, arguing that the FAA had been continually tightening security at
airports since the Lockerbie disaster. Measures included boosting the number of
security specialists and installing explosive detection systems.

Senator Alfonse D'Amato, a New York Republican, panel member and advocate of
tough action against terrorists, said the commission could not offer any
conclusions on who was responsible for the bombing or which countries might have
lent their support.

The report criticises the US State Department for failing to react
compassionately to victims' families and for its handling of threats against Pan
Am before the bombing.

Details, Page 8; Pan Am's long haul to survival, Page 29

New York:
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                   Copyright 1990 The Financial Times Limited

                             2697 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            May 16, 1990, Wednesday

Bhutto seeks Islamic states' support over Kashmir


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 522 words

MS Benazir Bhutto, Pakistan's Prime Minister, arrived in Iran yesterday to open
her tour of Islamic countries to seek support for Pakistan's stand on the
increasingly tense dispute over Kashmir.

Ms Bhutto is looking for financial, military and political support from eight
countries:Iran, Turkey, Syria, Jordan, North Yemen, Egypt, Libya and Tunisia.
She wants Islamic support in a high risk strategy which could raise Kashmir from
a local dispute to, at worst, a pan-Islamic issue with the characteristics of a
jihad (holy war).

Ms Bhutto, the only woman Moslem head of state and one of the few democratically
elected Moslem leaders, travelled immediately to the shrine of Imam Reza. She
was due to go to Tehran later for talks with Iranian officials.

Iran and Saudi Arabia are by far the largest, most powerful potential Moslem
supporters. Saudi Arabia does not appear on the official itinerary but there are
repeated unconfirmed reports that both Saudia Arabia and Iran have offered air
support to Pakistan in an emergency.

Pakistan's military and diplomatic links with both countries are close and Iran
has a land border with Pakistan across which supplies could be easily

Kashmir was divided at partition. The Indian state of Jammu and Kashmir
comprises about two-thirds of the territory and has a Moslem majority. It is the
only Indian state without a Hindu majority. It is therefore an essential element
of India's secular character.

Pakistan's third of the territory is known as Azad (Free) Kashmir. Moslems on
both sides of the border are agitating for independence.

Pakistan says the Kashmiris must be allowed to determine their future, but means
by this that all Kashmir should be under Pakistani control if the Moslems wish
that; Pakistan would be as hostile to Kashmir becoming an autonomous state as
India. Such a move would lead to other separatist moves in Pakistan, notably in
Baluchistan and Sind, which could spell the disintegration of the country.

Ms Bhutto's international Moslem initiative contrasts with her previous efforts
to contain the dispute and avoid inflammatory comments and actions. Both she and
Mr V.P. Singh, the Indian Prime Minister, are unwilling to see the dispute
degenerate yet again into war. But there are signs that Ms Bhutto's increasingly
beleaguered minority government may be looking for the 'traditional' distraction
of an external crisis.

Mr Singh, also heading a minority government and so far unable to bring the
disturbances under control, faces pressure from opposition figures and Hindu
fundamentalists to take a strong military stance. Pakistan denies Indian charges
that it arms and trains Moslem militants. More than 300 people have been killed
in the secessionist uprising since mid-January.

India and Pakistan have twice gone to war over the disputed territory. If there
were another war Pakistan would again face certain defeat on its own. Military
support, particularly in the air, from other Moslem states would change the

A Pakistani Foreign Ministry spokesman insisted that the purpose of Ms Bhutto's
trip was peaceful.


GRAPHIC: Picture, Bhutto, seeking support

                   Copyright 1990 The Financial Times Limited

                             2698 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            May 16, 1990, Wednesday

Saudi unease at Yemeni unity


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 665 words

Victor Mallet describes an Arab merger worth taking seriously

DECLARATIONS about Arab unity or the merger of Arab states are usually greeted
with well-deserved scepticism by Arabs and outsiders alike, but the imminent
unity of the two Yemens is a far cry from the North African merger fantasies of
Colonel Muammer Gadaffi of Libya.

The leaders of North and South Yemen, eager to forestall any opposition, are
pressing ahead with plans to declare a united state within a matter of weeks -
six months ahead of schedule.

They have already embarked on joint oil exploration in a previously disputed
border zone, allowed free movement of goods and people between the two
countries, permitted the use of both national currencies throughout the Yemens,
and announced the dissolution of their respective armed forces ahead of the

Strategically-placed at the mouth of the Red Sea, a united Yemen of some 12m
people would be the Arabian peninsula's most populous nation.

The poverty which characterises the Yemens today could eventually be mitigated
by further oil discoveries and the development of agriculture, and a united
Yemen would be more forceful in any negotiations about its long-disputed borders
with Saudi Arabia.

At the weekend Saudi Arabia reaffirmed its public support for Yemeni unity and
denied attempting to disrupt the process by supporting the dissident and warlike
Yemeni tribesmen of the north.

Privately, however, the Saudi royal family is worried about the political and
security implications of a united Yemen after years of Saudi economic and social
superiority; more than 1m Yemenis work in the Kingdom as migrant labourers.

Although the more numerous North Yemenis will be dominant after the merger, the
Saudis fear that the communist and secular principles of the South Yemeni
Government will dilute the more traditional Islamic values of the North.

The two Yemens, moreover, have outlined plans for a constitutional, democratic
state which could undermine the legitimacy of the Gulf's traditional ruling
families at a time when pro-democracy campaigners are already becoming
increasingly active in Kuwait.

Saudi Arabia is particularly anxious about the alliance between Iraq and North
Yemen. Iraqi military advisers are assisting the Yemeni armed forces, and the
Saudis - although they now have tolerably good relations with Baghdad - fear the
long-term effects of Iraqi influence on their southern as well as their northern

Even if Yemeni unity is declared as planned by the end of this month, the
integration process will be fraught with difficulties.

The northern tribesmen will continue jealously to guard their lucrative
smuggling trade from the authority - and the taxes - of the central government,
while civil servants in Sanaa and Aden, the two capitals, will be reluctant to
lose their influence in a united bureaucracy.

At the upper echelons of the future political and military establishments,
however, the hierarchy appears to have been largely decided.

President Ali Abdullah Saleh, the army colonel who has brought stability to the
North since coming to power in 1978, will be the Yemeni President. Mr Ali Salem
al-Baidh, head of the ruling South Yemeni Socialist Party, is expected to be
vice-President, while Mr Haider Abu Bakr al-Attas, President of the South, may
become Prime Minister.

One of the main obstacles to a harmonious merger is the dispute over the role of
Islamic sharia law. The draft constitution, which should be ratified soon by the
two countries' national assemblies, enshrines sharia as the main source of
future legislation.

Some devout Zaidis of the north want sharia to be the only source of
legislation, while those who have benefited from communism in the south fear
that secular principles will be thrown out of the window. Three bombs blasts
recently in Sanaa in the North were blamed on Moslem extremists opposed to
unity; in the South, thousands of women demonstrated earlier this year for
women's rights to be guaranteed in the constitution.


                   Copyright 1990 The Financial Times Limited

                             2699 of 2746 DOCUMENTS

                        Financial Times (London,England)

                              May 14, 1990, Monday

Chad accuses Libya

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 43 words

Libya is recruiting soldiers to stage a new attack on Chad from Sudan, according
to Chad's official radio. In Sudan, the government radio said 10,000 refugees
entered the country from Chad following renewed fighting between Chadian troops
and rebels.


                   Copyright 1990 The Financial Times Limited

                             2700 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             May 9, 1990, Wednesday

Closer look at TV graphics


SECTION: SECTION I; Technology; Pg. 22

LENGTH: 634 words

Computer graphics engineers at Channel 4 News had a small problem with the state
of the art computer equipment that was used to re-launch the news programme last
week. In trial runs, the graphics, which animate television pictures in real
time and in three dimensions, gave famous people, such as President Bush and
Mikhail Gorbachev, a third eye by distorting their features for dramatic effect.

Television news is not noted for distorted images, but the engineers
deliberately set out to distort the topical opening sequence to make it more eye

The idea was to use a computer-generated image of a long magnifying glass, to
pass light diagonally over deliberately darkened opening pictures.

The effect was eye catching but the initial computer attempts created the
illusion of additional eyes as it passed over famous faces, a problem that was
overcome by the time the first broadcast was aired.he image of the long
magnifying glass passing over the opening pictures was created by Channel 4
engineers using computer graphics terminals, known as Harry, made by Quantel of

The equipment permits real time animation of designs on video disc for up to two
minutes of animation. Any shape, including those on video film, can be made to
move, as Harry can be programmed to run modifications to pictures in sequence to
create a moving image on top of a piece of news film.

This allowed the engineers to subtly distort and lighten parts of the opening
picture, in sequence, to make it look as though an illuminating magnifying glass
was passing over the news film pictures.

The process is time consuming, requiring about 45 minutes to complete the title
sequence for Channel 4 News, although a short clip of film can be processed and
animated in 3D in about 10 minutes, where the rest of a title sequence has been
prepared in advance.

ITN was the first television newsroom in the UK to use computer graphics, in
1982. The work was based on ITN's own VT80 computer graphics equipment, based on
a Digital Equipment Company Microvax II computer. The VT80 was derived from the
earlier VT30, which was used first to provide computer graphics for the
television coverage of the 1974 UK general election.

Harry enables the engineers to manipulate in real time action pictures in a
computer simulation of three dimensions. Harry is to be used with the existing
VT80 computer graphics equipment which also offers animation and with the
Quantel Paint Box computer graphics equipment used for the generation of still
graphics and pictures in two dimensions. Paint Box is a multi-colour electronic
painting system. The still pictures can be incorporated into the animated
sequences generated by VT8 and Harry.

Richard Tait, editor of Channel Four News, says the ability to use 3D animated
graphics in real time superimposed on news film will not result in changes in
editorial judgments about news or the content of the news programme. 'The
technology will make us more picture conscious and we will look for stronger
pictures,' he says.

'But we have the graphics power to make things more dramatic for the viewer than
they were before. A sudden coup in Libya, for example, where there might be no
pictures, could lead us to do a short profile with computer generated animated
graphics in 3D.'

Tait says the initial aim was to break down the old distinctions between which
machines did which work:'The effect is seamless. Computer graphics as we now use
it is a way of binding the whole production process together.'

Richard Norley, senior designer for Channel Four News, says although Harry can
edit up to two minutes of film, the engineers hope to be able to link it to
digital video recorders to enable an infinite amount of film material to be
processed with animated sequences.


                   Copyright 1990 The Financial Times Limited

                             2701 of 2746 DOCUMENTS

                        Financial Times (London,England)

                              May 4, 1990, Friday

Screwworm threatens livestock, warns UN


SECTION: SECTION I; Commodities & Agriculture; Pg. 36

LENGTH: 377 words

LIVESTOCK in Africa, southern Europe and Asia could be in danger from a
destructive parasite known as the New World screwworm unless immediate action is
taken to eliminate it from Libya, the UN's Food and Agriculture Organisation has

The screwworm, a parasite of all warm-blooded animals including man, is the most
destructive pest of livestock in the Americas, where it is now largely under
control. FAO believes it was carried to Libya through an infested animal brought
from South America more than a year ago.

For the time being, the pest is confined to an area of some 18,000 sq km, 30km
south of Tripoli and 60km east of the border with Tunisia. Stressing that the
screwworm has never before established itself outside the western hemisphere,
FAO director-general Edward Saouma said if it were not swiftly eradicated 'it
will spread throughout Africa to the Middle East, southern Europe and eventually
into Asia.'

The FAO estimates that it would cost Dollars 84m over two years to eradicate the
Libyan infestation, against at least Dollars 250m if it got a hold in the five
countries of North Africa alone. 'Costs of further spread are incalculable,' the
FAO says.

The screwworm, cochliomyia hominivorax, ('devourer of man') is a dark blue-green
fly with orange eyes, somewhat larger than a housefly. The female lays eggs in
wounds as small as tick bites. The larvae eat deeply into living flesh and the
host, unless treated, usually dies.

The only method of eradicating the screwworm is by the sterile insect
technique:the female, mating with a sterile male, lays eggs that do not hatch,
breaking the life cycle.

Sterile flies are only produced by the Mexico-US Screwworm Eradication
Commission, which has now been authorised to sell the fly to the FAO.

FAO says it is to alert donors to the need for emergency funds at a special
consultation in Rome on May 18. So far less than Dollars 10m has been spent,
principally by the Libyan Government.

'It is still technically feasible to eradicate the screwworm, but once it
becomes established in tropical Africa that will be impossible at any price,' Mr
Saouma said.

Humans, especially infants and the aged, are at risk from the screwworm when
they are weakened by malnutrition.


                   Copyright 1990 The Financial Times Limited

                             2702 of 2746 DOCUMENTS

                        Financial Times (London,England)

                              May 4, 1990, Friday

Inventor can enforce Irish judgment in bullet-proof vest case


SECTION: SECTION I; Legal Column; Pg. 46

LENGTH: 1357 words

Justice Fox, Lord Justice Stuart-Smith and Lord Justice McCowan):April 11 1990

LEAVE to defend summary proceedings to enforce a foreign judgment will not be
granted on the basis of an allegation that it was obtained by fraud if the
defendants are estopped from raising the issue for a second time by another
foreign judgment which has already established there was no fraud. And a
defendant to the first judgment, though not party to the second, is similarly
estopped by privity of interest if his liability was joint and several and he
chose not to participate in the second proceedings, but to let his co-defendants
seek to establish fraud for his benefit as well as their own.

The Court of Appeal so held when dismissing an appeal by the third defendant, Mr
Gordon Stewart Macleod, from a decision of Sir Peter Pain sitting as a deputy
High Court judge, giving summary judgment for enforcement of a judgment debt in
favour of the plaintiffs, House of Spring Gardens Ltd, Armourshield Ltd, and Mr
Michael Sacks. The first defendant to the action was Mr William Edward Waite.
The second defendant was his son, Mr Seamus Waite.

LORD JUSTICE Stuart-Smith said that in the late 1970s Mr Sacks invented a
bullet-proof vest.

Mr Waite had connections in Libya. His son Seamus and his son-in-law Mr Macleod,
were involved in his business.

He induced Mr Sacks to impart all the valuable information with regard to the
vests on the faith of an oral agreement that he would enter into a joint venture
for the supply of the vests to Libya, and that profits would be equally divided
between them.

On August 11 1979 Mr Waite signed a contract for sale of Pounds 5m worth of
vests to the Libyan army. He secretly manufactured the vests at Cork and told Mr
Sacks that the contract with the Libyans had collapsed. That was a lie. Mr Sack
discovered the deception.

In June 1980 the plaintiffs launched actions in the UK and the Republic of
Ireland for damages for misuse of confidential information and breach of
copyright. The proceedings were settled by agreement that Mr Waite would pay a
11.58 per cent royalty on vests sold, and would notify Mr Sacks of any further
contract which might be entered into with the Libyans.

Manufacture of vests to fulfil a second contract began in 1981. Mr Sacks'
discovery of its existence led to a second round of litigation.

In February 1982 the plaintiffs launched two main actions, one in Ireland and
one in the UK.

In Ireland Mr Justice Costello found that Mr Waite had tricked Mr Sacks into
parting with valuable confidential information, and that all three defendants
had wrongfully used the information in breach of copyright.he plaintiffs
obtained judgment for Pounds 3,474,570 with interest.

The UK action proceeded no further.

The third round of litigation did not directly involve Mr Macleod.

On January 28 1985 Mr Waite and Mr Seamus Waite launched proceedings in Ireland
against the plaintiffs claiming that Mr Sacks had obtained the Costello judgment
by fraud.

Mr Justice Egan rejected the case. He held that evidence given for the Waites
had been false and that the witness had been promised Pounds 300,000 plus a 50
per cent royalty if the Costello judgment was set aside.

On March 21 1985 the plaintiffs issued the writ in the present action, seeking
to enforce the judgment of Mr Justice Costello. The defendants' answer was that
the Costello judgment was obtained by fraud.

Sir Peter Pain held that the Waites were estopped from alleging fraud on the
basis of the evidence given in the Egan judgment; and that Mr Macleod, though
not a party to the Egan proceedings, was bound by the estoppel because of
privity of interest between him and the Waites.

Mr Macleod appealed.

The first question was whether the Waites were estopped by the Egan judgment
from contending that the Costello judgment was obtained by fraud.

On an Order 14 summons for summary judgment to enforce a foreign judgment debt,
leave to defend should be given if the defendant's evidence disclosed a triable
issue that the foreign judgment had been obtained by fraud.

But a foreign judgment that was final and conclusive on its merits and was not
impeachable on grounds of fraud (or other grounds) was conclusive as to any
matter thereby adjudicated on, and could not be impeached for any error of fact
or law (see Dicey & Morris, Conflict of Laws, 11th ed rule 42 page 460 vol 1).

Unless Mr Justice Egan's decision itself was impeached for fraud, it was
conclusive of the matter on which it adjudicated, namely whether the Costello
judgment was obtained by fraud.

Sir Peter Pain was correct to hold on the material and argument before him, that
the Waites were estopped from alleging that the Costello judgment was obtained
by fraud.

Even if the Egan judgment did not create an estoppel it would be an abuse of
process for the Waites to relitigate the very same issue in the English courts -
not least because they chose the Irish forum, which was the natural forum, in
which to challenge the Costello judgment. They could not try again in the UK to
get a different verdict.

The second question was whether Mr Macleod was bound to Mr Justice Egan's

Mr Macleod was not a party to the action. But an estoppel would bind those who
were privy to the parties bound.

The requisite privity was of blood, title or interest. In the present case the
relevant privity was of interest.

In Gleeson (1977) 1 WLR 510,515, Sir Robert Megarry, Vice Chancellor, propounded
a test of privity of interest. He said there must be sufficient degree of
identification between the two litigants 'to make it just to hold that the
decision to which one was party should be binding in proceedings to which the
other is party'.

In Nana v Nana (1958) AC 95,102, Lord Denning applied the principle that 'if a
person, knowing what was passing, was content to stand by and see his battle
fought by somebody else in the same interest, he should be bound by the result'
(See Wytcherley v Andrews (1871) 2 P & D 327).

In the present case all three defendants were joint tortfeasors, having acted in
breach of the duty of confidence in relation to the confidential information,
and in breach of copyright. The judgment against them was joint and several.

Mr Macleod was well aware of the Egan proceedings. He could have applied to be
joined and no one could have opposed his application. He chose not to do so, and
he had vouchsafed no explanation as to why he did not.

Instead he was content to sit back and leave others to fight his battle at no
expense to himself.

That was sufficient to make him privy to the estoppel. He was bound by the
decision of Mr Justice Egan.

The same result could equally well be reached by the route of abuse of process,
which was untrammelled by the technicalities of estoppel.

In Hunter v Chief Constable of West Midlands Police (1982) AC 529,539, Lord
Diplock said that abuse of process concerned 'the inherent power which any court
of justice must possess to prevent misuse of its procedure.'

The question was whether it would be in the interests of justice and public
policy to allow the issue of fraud to be litigated again in the present court,
it having been tried and determined by Mr Justice Egan in Ireland.

It would not. It would be a travesty of justice. Not only would the plaintiffs
be required to relitigate matters which had twice been extensively investigated
and decided in their favour in the natural forum, but it would run the risk of
inconsistent verdicts being reached not only as between the English and Irish
courts, but as between the defendants themselves.

Public policy required that there should be an end to litigation, and that a
litigant should not be vexed more than once in the same cause.

The appeal was dismissed.

Lord Justice McCowan gave a concurring judgment. Lord Justice Stuart-Smith

For Mr Macleod: Lionel Swift QC and Michael Harington (T Cryan & Co, Wealdstone)

For the plaintiffs: Gavin Lightman QC and Alan Boyle (Philip Conn & Co,


                   Copyright 1990 The Financial Times Limited

                             2703 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             May 3, 1990, Thursday

Criticism of hostage policy renewed

BYLINE: ROBERT MAUTHNER, Diplomatic Correspondent


LENGTH: 465 words

THE statement yesterday by freed American hostage Mr Frank Reed that he had seen
two British hostages in the Middle East has rekindled criticism of the
Government's policy on hostages.

It was the first definite news that the hostages, Mr John McCarthy and Mr Brian
Keenan, are still alive. Mr Reed said that the two men, although blindfolded
most of the time, were well. He added that he had seen them as recently as last
weekend. However, there was no immediate news of the other two British hostages,
Mr Terry Waite and Mr Jack Mann.

Miss Jill Morrell, a friend and colleague of Mr McCarthy and one of the leaders
of the campaign to free him, said:'Frank Reed's release does show that if you do
talk to the Syrians and do discuss things with the Iranians this kind of thing
can happen.'

Mr Gerald Kaufman, the Opposition spokesman on foreign affairs, called on the
Government to make known the efforts it is undertaking to gain the release of
the British hostages in the Middle East.

With pressure mounting at Westminster for the Government to undertake a fresh
diplomatic initiative in the Middle East, criticism of British policy was
fuelled by a Home Office announcement yesterday that an Iranian student would be
deported from the UK for reasons of national security.

Fears that the deportation would damage prospects for the release of the British
hostages were prompted by a statement by the Iranian national news agency IRNA.

'The British Government once again demonstrates its hostility against the
Islamic revolution by expelling another Iranian Moslem student,' the statement
said. 'Ironically, London has repeatedly asked the Islamic Republic of Iran to
help secure the release of British hostages in Lebanon.'

While Iran is seen to be seeking western help to rebuild its shattered economy,
its relations with Britain - severed last year over Mr Salman Rushdie's
controversial book The Satanic Verses - are still too bad for Tehran to turn to
the UK for aid.

Britain has also had no diplomatic relations since 1986 with Syria, the other
country with great influence in Lebanon, or since 1984 with Libya, reputed to
have close contacts with various Islamic extremist groups.

The US, on the other hand, is looked upon by the Iranians as the main potential
source of economic aid. It also holds the powerful card of being in possession
of Dollars 6bn to Dollars 10bn (Pounds 3.7bn to Pounds 6bn) - depending on
whether one believes US or Iranian estimates - of frozen Iranian funds and

Although Washington has proclaimed its 'no deals with hostage-takers' policy as
loudly as Britain has, the indications are that it would be prepared to unfreeze
the Iranian funds once all hostages in Lebanon are released and relations with
Iran return to normal.


                   Copyright 1990 The Financial Times Limited

                             2704 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             May 3, 1990, Thursday

Questions on fire

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 16 words

Libya is questioning two West Germans about a fire at a Libyan chemical plant in


                   Copyright 1990 The Financial Times Limited

                             2705 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             May 2, 1990, Wednesday

Opec president calls for big production cuts


SECTION: SECTION I; Commodities & Agriculture; Pg. 38

LENGTH: 706 words

THE ORGANISATION of Petroleum Exporting Countries should cut between 1m and 1.5m
barrels a day from current production in order to stabilise oil prices,
according to Mr Sadek Boussena, the Algerian minister serving as Opec president.

He spoke in Geneva yesterday as the 13 Opec oil ministers met for their
emergency session aimed at propping up oil prices following a big drop since the
end of March.

Reports coming from delegates to the meeting indicate that the ministers will be
focusing on short term efforts to take an excess of crude oil supplies out of
the market. The difficult issues - the Opec reference price, quota allocations,
and production ceiling - will be saved until the formal semi-annual ministerial
conference set for late June.

However, some of the principal objectives of the meeting appear well on the way
to being reached.

Although oil prices are still below the Opec minimum reference price of Dollars
18 a barrel, they had risen off the floor of Dollars 15 last month. Brent crude
oil for June delivery yesterday closed up 0.15 cents at Dollars 17.325.

Opec production is also already coming off the peaks hit in March. From a high
of about 24m barrels a day, Opec production is thought to fallen to about 23.5m
b/d. Some analysts believe it will continue to fall regardless of any action
taken at the Geneva meeting.

'It is already happening by force of the market,' says Mr Joseph Stanislaw, of
Cambridge Energy Research Associates.

Mr Stanislaw says that weak oil prices, full storage tanks, and difficulties in
marketing crude oil had forced producers to cut back output, and that these
factors would continue to push down on supplies in the weeks ahead.

Opec's main challenge, he said, was to issue a pleasing statement to oil traders
and try to take credit for what is happening of its own accord.

'I think this thing is cooked already,' said one Opec watcher. 'They recognise
that they have to pump some good news into the market.'

Opec ministers have been in intensive consultations by telephone in recent
weeks, and there is widespread expectations that the meeting will be short,
produce a show of unity, while announcing production cutbacks of a million or
more barrels a day.

Saudi Arabia, Kuwait and the United Arab Emirates are all producing
significantly above their quota. Libya, Nigeria, and Venezuela are
over-producing to a lesser extent.

Early hopes that Opec would agree an across-the-board 5 per cent cut from all
members now appear unrealistic. Some members, such as Iran and Iraq are already
producing below quota. On the other hand, countries such as Kuwait, have
questioned why some countries production quotas are set far below production
capacity, while others are unable to produce their full quota.

These conflicts are unlikely to be addressed seriously at today's meeting, but
the ground could well be laid for June's meeting. It is still unclear how the
final communique will be worded to fudge over these differences this week, or
whether it will add strength to forces already at work in the market.

'It will be good for oil prices, but I don't think they will rally
significantly,' said Mr Stephen Turner, an analyst at Smith New Court. 'My guess
is that oil prices will stay in the doldrums for two to three months from here.'

Refining margins have remained very attractive, reflecting the continuing
relative strength of refined product prices. Maintenance work has shut down a
number of US refineries, which are capable of processing heavy, sour, or high
sulphur crudes. When these refineries start up shortly, in preparation for the
summer driving season, the huge surplus on the market of heavy, sour sulphur,
crudes should begin to reduce. One issue much which was talked about as late as
March appears to have been pushed firmly off the agenda. That was lifting the
Opec reference price above Dollars 18 a barrel for a basket of Opec crudes.
Indeed the collapse of oil prices soon after the March meeting of Opec ministers
looked very much like an effort by Kuwait and other big Gulf producers to
undermine moves in that direction. They could well surface again, however,
depending on the strength of oil prices running up to the June meeting.


GRAPHIC: Graph, no caption; Picture, Sadek Boussena, talks to prop up falling
oil prices

                   Copyright 1990 The Financial Times Limited

                             2706 of 2746 DOCUMENTS

                        Financial Times (London,England)

                              May 1, 1990, Tuesday

Arab bank gets go-ahead for international issue


SECTION: SECTION I; International Capital Markets; Pg. 33

LENGTH: 376 words

ARAB BANKING Corp, the Arab world's largest bank, plans to go ahead with its
Dollars 250m international share offering by the middle of this month. The issue
will be the first to foreign investors by a Gulf-based company.

Mr Abdulla Saudi, president and chief executive of the bank, said in London
yesterday that the issue would be managed by Credit Suisse First Boston, CCFI -
a Saudi-based investment house - and ABC's own investment bank.

The issue has required the passage of a special Bahraini law to enable the sale
of the stock to non-Gulf residents. Mr Saudi said this was significant for
future foreign investment and listing of foreign companies on Gulf exchanges.

The issue will increase ABC's paid-up capital from Dollars 750m to Dollars 1bn.
The bank's three shareholders, the Kuwait Finance Ministry, the Central Bank of
Libya and the Abu Dhabi Investment Authority, have waived their rights so that
fresh shareholders can invest in the bank. The bank hopes most of the issue will
be taken up by Arab investors.

Mr Saudi said the proceeds from the issue would be used to finance the
restructuring of the bank. In particular it wants to establish its European
operations as a separate entity based on its three branches in London, Milan and
Paris, which together account for 45 per cent of earning assets. This bank would
probably be based in the UK, and would own ABC's subsidiary interests in Spain,
West Germany and Monaco.

Resources would also be devoted to establishing ABC more strongly in the Arab
world, where it is relatively less known because of its emphasis on
international activity. Mr Saudi said he believed there was potential in the
growth of European-Arab contacts.

Last year, ABC showed pre-tax profits of Dollars 35m, which was down sharply
from Dollars 142m the year before owing to non-payment of interest by less
developed countries. It applied all this profit to LDC provisions, which are now
equivalent to 43 per cent of exposure.

The group's capital ratio under the new international rules is 11.8 per cent
compared to the agreed minimum of eight per cent.

Orkla Borregaard, the Norwegian industrial group, is postponing a planned issue
of around 2.5m B shares as a result of share market weakness.


                   Copyright 1990 The Financial Times Limited

                             2707 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             April 23, 1990, Monday

BT profit margin at 60% for international calls;
Document details overseas market - Company confirms figures are 'pretty good'


SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 702 words

BRITISH Telecom's profit margin on international telephone calls is nearly 60
per cent, according to a confidential internal document. The high level of
profit reflects BT's dominant position in the UK market and its membership of an
international telephone cartel whose activities were revealed by the Financial
Times earlier this month.

The document discloses that BT expected international calls to generate profits
of Pounds 445m from revenues of Pounds 770m in the year to March 31 1988. Since
the document was written, the company's profit margins from international calls
have almost certainly increased as advances in technology and economies of scale
from higher traffic have cut costs.

BT's 1987-1988 profit margin - operating profit as a percentage of net revenue -
was 58 per cent. This meant that telephone users were being charged well over
twice costs, even after taking into account depreciation and a contribution paid
towards the use of BT's domestic network by the international division.

When asked to confirm its profit margins on international calls, BT said
yesterday that the company would not reveal precise figures on grounds of
commercial confidentiality but that the margins were 'pretty good.'

The detailed information on BT's international profits will put pressure on the
UK's Office of Telecommunications, the industry's watchdog which has recently
launched an investigation into international prices, to force BT to cut them.

It will also increase the likelihood that the Government will license new
companies to compete with BT and Mercury in international services from November
when their monopoly rights run out.

Oftel said yesterday it would look at BT's profit margins as part of its present
review. The organisation said its general policy was to introduce more
competition into telecommunications markets, but it would not say what it
proposed to do until the review was completed at the end of the summer.

The BT document, dating from 1987, is an internal planning paper produced by its
international division projecting profits. It shows BT's revenues, costs and
profits on a route-by-route basis.

They are the first detailed figures on the international telephone cartel to
enter the public domain and are probably broadly representative of profits on
international calls made by telephone companies in other countries. Some
companies, such as Spain'selefonica, which charge their customers even higher
prices for international calls, are probably earning fatter margins.

Of BT's leading routes, the document shows that the highest margin was with
Israel at 79 per cent. The lowest was with Italy at 36 per cent.he only route on
which BT lost money was UK-Libya, where provisions for bad debts pushed it just
into the red.

In most industries, a profit margin above 20 per cent would be considered
generous and would attract new competitors who would cut prices and drive down
margins. This is impossible in international telephony because BT and its
smaller rival, Mercury Communications, have been granted monopoly rights on
carrying international calls out of the UK by the British Government.

BT has argued that its profits from international calls are needed to subsidise
the local network. But it doubts whether cuts in international prices would have
to lead to an increase in local ones because BT is already making large profits
from its domestic network. BT's pre-tax profits from all services are expected
to reach Pounds 2.7bn in the financial year which ended on March 31.

The document shows that BT expected to collect Pounds 800m from customers for
international calls in 1987-88. Under the obscure accounting rate system used by
the cartel for sharing revenue, it expected to pay foreign phone companies a net
Pounds 30m, leaving it with net revenue of Pounds 770m.

BT's international costs were made up of Pounds 146m, which was to be paid
towards the use of BT's domestic network, and Pounds 178m for running the
international network - of which Pounds 87m was for the use of international
satellites and cables, whose costs have fallen dramatically in the past decade.

Crossed lines on a tariff for international calls Page 7


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                   Copyright 1990 The Financial Times Limited

                             2708 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            April 19, 1990, Thursday

Untitled item


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 57 words

A GROUP calling itself the Tunisian Arab Revolution has threatened to attack
Britons and Americans in retaliation for their governments' recent conduct
towards Libya and Iraq, writes Jihan El-Tahri in Tunis. A communique said the
group will retaliate because of British and US involvement in the fire at the
Rabta Libyan chemical plant.


                   Copyright 1990 The Financial Times Limited

                             2709 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            April 14, 1990, Saturday

Local Elections;
Conservatives may escape rout in council elections



LENGTH: 840 words

Richard Evans assesses the state of the parties in local campaigns that are
likely to be hard fought

THE NEXT three weeks may produce one of the roughest local election campaigns
for years, as the Conservative Party seeks to recover from the battering it has
received in the opinion polls and Labour tries to consolidate its lead.

On the face of it, the Tories should be set for another humiliation, but that
may not necessarily be so. The 5,000 seats being contested in England, Scotland
and Wales on May 3 were last fought in 1986. Labour had a year of triumph, with
net gains approaching 500 seats, and the former Alliance parties also did very

Those elections came in the wake of the messy Westland affair, the controversial
use of British bases by the US in the bombing of Libya, and the Tory loss of the
Fulham parliamentary seat to Labour. Labour and the Liberal Democrats,
therefore, have more seats at risk than the Conservatives, compared with former

Of the 4,538 seats being contested in England and Wales, Labour holds 2,238, or
49 per cent, the Conservatives 1,439 (39 per cent) and the former Alliance
parties 710 (16 per cent). Independents and others hold 151 seats. In Scotland,
Labour is also in a dominant position, holding 225 of the 467 seats up for

By its own admission, Labour has to do well to hold on to what it already
controls, and some of the electoral arithmetic may not be as bad as some Tories

The Conservatives are defending control of three metropolitan district councils,
54 English non-metropolitan districts and 13 London boroughs.

It is in London that the roughest in-fighting is likely to be found. Partly that
is because all seats are being contested and there is therefore more chance of a
change of control; partly it is because the arguments in the capital over the
poll tax are at their fiercest.

Both Westminster and Wandsworth have wafer-thin Tory majorities of four and one
respectively, and both have showpiece poll tax levels, of Pounds 195 in
Westminster and Pounds 148 - the lowest level in England - in Wandsworth.

Given that Mr Kenneth Baker, Conservative Party chairman, has shrugged off the
manifest unpopularity of the community charge and made it the centrepiece of the
Tory campaign, the loss of either borough would be a catastrophe.

The Conservatives have efficient election machines in both boroughs, and Labour
strategists are cautious about forecasting a win in either.

Nevertheless, Labour believes it has an outside chance of winning five boroughs
- Westminster; Wandsworth; Hillingdon, where the Tories have 28 seats, Labour 34
and the Liberal Democrats 7; Merton, where Independents hold the balance between
Tories with 28 and Labour with 25; and Tower Hamlets, which the Liberal
Democrats hold on the casting vote of the mayor.

The Tories are by no means on the defensive across the board in London, however.
They are targeting three Labour-held boroughs:Ealing, Brent and Lambeth, as well
as Sutton and Richmond, which are in Liberal Democrat hands.

Outside London, there are unlikely to be many changes in control, as only a
third of seats in England and Wales are being contested.

The biggest prizes for Labour would be Bradford, another Tory flagship council,
where Thatcherite policies have been pushed through, andrafford in Greater
Manchester, which the Tories hold by a majority of one over Labour and the
Liberal Democrats. Another good chance of a Labour gain is Watford, where party
rebels have driven Labour from overall control.

The Conservatives' best prospect for a gain in the metropolitan areas is at
Bury, and Derby City Council should be an interesting contest, as it is a
classic example of a Conservative marginal levying a high poll tax.

The elections will be particularly important for the centre parties, which are
fighting for their credibility, and the performance of the Liberal Democrats in
particular might have a significant influence on how well the Tories do.

In spite of their low standing in the national opinion polls and in recent
parliamentary by-elections, the Tories have traditionally been strong in local
government, where they have been averaging 22 per cent in local by-elections.

The Liberal Democrats' strategy is 'what we have, we hold', and they are putting
their energies into defending seats and going for a number of carefully chosen
gains. The Greens go into combat with the highest number of candidates ever in
the local elections. About 1,500 will be standing, more than double the number
last May, and around 13 seats will be defended. One of the biggest worries for
Labour is the first appearance of the Islamic Party of Britain, which will be
fielding candidates in Blackburn, Bolton, Bradford, Leicester, Newham,
Preston,ower Hamlets and Walsall.

But the main contest will clearly be between the Conservatives and Labour, and
if Mr Kinnock's new-style party can pick up thousands of votes from the old
centre parties in the Midlands and south-east, it will produce more warning
signals for the Government.

Poll tax tests community spirit, Weekend FT Page III


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                   Copyright 1990 The Financial Times Limited

                             2710 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            April 12, 1990, Thursday

Bulgarians seek debt moratorium


SECTION: SECTION I; European News; Pg. 2

LENGTH: 313 words

THE BULGARIAN authorities want to postpone all debt repayments for up to two
years and to start repaying their short-term debt by 1994.

Mr Belcho Belchev, the country's Finance Minister, who is visiting London, said
he was optimistic that the debts could be stabilised by the mid-1990s but, in
the meantime, fresh credits were vital.

Bulgaria faces repayments totalling Dollars 3bn this year. Mr Belchev said that
about Dollars 300m of this had already been paid through raising new credits.

Problems arose when the Foreign Trade Bank, which accounts for 85 per cent of
the country's gross debt of Dollars 10bn, suspended all repayments, except
interest, owed to western financial institutions.

Expected repayments totalling Dollars 800m owed to Bulgaria had failed to
materialise. 'We received only Dollars 100m.' Most of the outstanding debts are
owed by Iraq, Syria and Libya.

'We now need Dollars 1.5bn to see us through 1990,' he explained, adding that
Bulgaria had received credit lines worth Dollars 600m from Spanish, Italian,
French and Austrian financial institutions. Negotiations are taking place with
Japanese and French financiers.

Although Mr Belchev blamed part of the problem on Mr Todor Zhivkov, who was
ousted from power last November, he said the present leadership would have to
shoulder some of the responsibility.

'We found ourselves caught between the wasted investments of the old regime and
the modernisation plans of the new leadership. Our economic reform programme is
aimed at opening up the country to foreign investment,' he said.

Top priority is a new joint venture law. This falls short of Hungarian and
Polish legislation but Mr Belchev said that western investors would receive tax
concessions and that each company would be judged on an individual basis, a
reference to the delicate question of the repatriation of profits.


                   Copyright 1990 The Financial Times Limited

                             2711 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           April 11, 1990, Wednesday

Paris thanks Gadaffi for release of three hostages


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 628 words

THREE European hostages released by Palestinian extremists in Lebanon were due
to arrive in Paris last night as the French Government thanked Libya for its
part in ending their two-and-a-half year ordeal.

Ms Jacqueline Valente, a 32-year-old French woman, Mr Fernand Houtekins, her
42-year-old Belgian companion, and the couple's daughter Sophie, were freed by
Abu Nidal's Fatah revolutionary Council (FRC) in West Beirut yesterday morning.

Ms Valente and Mr Houtekins had been captured in November 1987 on a yacht in the
eastern Mediterranean, and Sophie was born in captivity a month later.

The French Foreign Ministry yesterday issued a statement expressing satisfaction
and recognition for this 'noble and humanitarian gesture'.his would be given
proper consideration in future relations between France and Libya, said the

Mr Francois Mitterrand, added his personal thanks to Col Muammer Gadaffi, the
Libyan leader, for the 'the determinant role' which he had played in 'this happy
ending', a statement from his office said.

Col Gadaffi yesterday called for western countries to respond by freeing Arab
political prisoners. He appealed on April 4 for the release of Ms Valente and
her family. (Ms Valente gave birth to two daughters in captivity, but the second
baby died at birth.)

Last month Paris returned to Libya three Mirage jet fighter aircraft sent to
France for repairs. The return of the fighters had been blocked since 1986. The
delivery, authorised by France last November, has been criticised by the US.

Formerly strained relations between France and Libya have picked up recently,
despite renewed allegations from other Western countries that Libya is illicitly
making toxic gas weapons.

Diplomatic relations have warmed since last August's agreement between Libya and
Chad to pave the way for a settlement of their frontier dispute, in which France
had been supporting the Chadian Government.

French officials deny that the return of the fighters was directly aimed at
obtaining the hostages' return, or that the delivery contravened a 1986 European
Community ban on arms exports to countries implicated in supporting terrorism.
The fighters do not increase Libya's military potential, they argue.

It is still unclear whether four remaining Belgian hostages captured along with
Ms Valente and Mr Houtikens are being held in Lebanon or Libya. Ms Valente told
journalists in Beirut yesterday that she was 'tired after the journey', fuelling
speculation that the hostages may have been transported from Libya before their

The four Belgian hostages still held by the FRC are Fernand Houtekins's brother,
Emmanuel, aged 44, his wife Godelieve, 50, and their two children, Laurent and
Valerie, who are 19 and 18 years old.

Mr Hollanis van Loocke, the director of political affairs at the Belgian Foreign
Ministry, is still in Beirut attempting to secure their release, but the FRC
appears determined to obtain the freedom of Nasser Said, one of its members
imprisoned in Belgium, before releasing the other hostages.

Nasser Said was found guilty in 1980 of carrying out a grenade attack which
killed a 15-year-old Jewish boy and wounded 20 worshippers at an Antwerp

The FRC sought to gain maximum publicity from the liberation of the three
Europeans yesterday. Since Col Gadaffi made his appeal on April 4, the FRC's
spokesman in Beirut, Mr Walid Khaled, has issued communiques and held press
conferences almost daily.

In an interview on April 5, Mr Khaled linked the FRC's hostages to 17 other
Western hostages held in Lebanon. He said the release of the hostages was a
'prelude' to the freedom of 'all' Western hostages and confirmed that his group
had made contact with pro-Iranian kidnappers.


GRAPHIC: Picture, Houtekins and Valente, freed in Beirut yesterday

                   Copyright 1990 The Financial Times Limited

                             2712 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            April 10, 1990, Tuesday

EPLF denies seeking aid from Arab regimes


SECTION: SECTION I; Letters; Pg. 21

LENGTH: 259 words

Sir, Julian Ozanne maintains ('Embattled Horn of Africa is centre of fresh power
struggle,' April 3) that the Eritrean People's Liberation Front (EPLF) has
'appealed to Arab governments for assistance' and claims that it has received
shipments of arms from Saudi Arabia, Syria, Iraq and Libya.

These assertions are utterly unfounded.

To begin with, the EPLF does not have links of any kind with Saudi Arabia,
prohibited as it is even to open an information office to cater for the sizeable
number of Eritrean exiles there.

Libya was until recently one of the main military allies of Ethiopia, supplying
it with substantial hardware, including Antonov transport aircraft during
Ethiopia's large-scale offensive against the EPLF in its Red Star Campaign of

Ethiopia's relations with Iraq are cosy, eliciting Addis Ababa's public praise
to Baghdad for its recent handling of the Kurdish problem.

Syria has never been prepared to risk the wrath of its Soviet ally by supporting
the EPLF militarily when Moscow has been involved massively in propping up the
Mengistu regime.

While this is the reality of the situation, the Ethiopian Government has
doggedly been sowing disinformation in its efforts to lure Israeli involvement
to add fuel to a turbulent region.

It is unfortunate that Mr Ozanne has fallen prey to this trap to portray the
30-year-old war of self-determination in Eritrea as an extension of the
Arab-Israeli conflict.

Yemane G. Meskel,

Responsible for Information,

EPLF (Europe Office),

140 Battersea Park Road, SW11


                   Copyright 1990 The Financial Times Limited

                             2713 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            April 10, 1990, Tuesday

Belgians negotiate for release of hostages in Beirut


SECTION: SECTION I; Overseas News; Pg. 10

LENGTH: 362 words

TWO Belgian diplomats yesterday met publicly with an official of Abu Nidal's
extremist Fatah Revolutionary Council (FRC) and said they were negotiating for
the release of five Belgian hostages.

They admitted that their discussions included the possibility of freeing a
Palestinian condemned to life imprisonment in Belgium for a grenade attack which
killed one person and wounded 20 in an Antwerp synagogue.

Mr Hollanis van Loocke, the director general of political affairs at the Belgian
Foreign Ministry, arrived in Beirut on Sunday for the negotiations. Previous
talks helped to secure the release of Dr Jan Cools, a Belgian relief worker, in
June 1989 - a week after the Belgian Government unfroze a Pounds 30m trade
credit to Libya.

Mr van Loocke was accompanied to the Mar Elias Palestinian refugee camp where
the FRC has its offices by Mr Jean Kamps, the Belgian charge d'affaires in

'It is true that the release of Nasser Said is a part of our discussions,' Mr
van Loocke said, referring to the FRC member jailed in Belgium. 'His early
release could be requested sometime this year.' He said that an earlier
statement by the Belgian justice minister denying that Nasser Said would be
released had been misunderstood. Mr van Loocke was welcomed by Mr Walid Khaled,
the spokesman for the FRC. Asked when the Belgians and Ms Jacqueline Valente,
the Frenchwoman, would be released, Mr van Loocke said:'I cannot tell you. They
haven't fixed a date. They just say as soon as possible.'

The five members of the Houtekins family and Ms Valente were seized by the FRC
from a yacht in the eastern Mediterranean on November 8 1987.

Ms Valente's two small daughters were freed in Libya in December 1989. She gave
birth to two daughters while a captive, possibly by her boyfriend Mr Ferdinand

FRC officials implied earlier that only Ms Valente, Mr Ferdinand Houtekins and
one of the infant girls would be released.

With the exception of two Swiss International Red Cross workers who may also be
held by the Abu Nidal group, the 17 other Western hostages in Lebanon are
believed to be held by factions of the pro-Iranian Hizbollah movement.


                   Copyright 1990 The Financial Times Limited

                             2714 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             April 6, 1990, Friday

Moves to release French hostage


SECTION: SECTION I; Overseas News; Pg. 9

LENGTH: 141 words

Mr Abu Nidal's Palestinian extremist Fatah Revolutionary Council (FRC) said
yesterday it was making contacts 'with concerned parties' to bring about the
release of a French woman and her family held hostage for the past 29 months,
writes Lara Marlowe in Beirut.

The statement came just over two weeks after France was reported to have
delivered three Mirage fighter planes to Libya.

The woman, Jacqueline Valente, 32, is widely believed to be held in Libya rather
than Lebanon. The statement signed by Walid Khaled, the FRC's Beirut spokesman,
was made one day after Col Muammer Gadaffi, the Libyan leader, called for
Moslems to release foreign hostages before the end of the Moslem feast of
Ramadan on April 26.

Ms Valente, her two daughters and five Belgians were seized from the yacht off
the coast of Gaza on November 8, 1987.


                   Copyright 1990 The Financial Times Limited

                             2715 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            April 5, 1990, Thursday

Libya backs Iraq

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 20 words

Libya backed Iraq in its war of words with the west and urged Arab states to
resist attempts to subjugate them.


                   Copyright 1990 The Financial Times Limited

                             2716 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             April 3, 1990, Tuesday

Embattled Horn of Africa is centre of fresh power struggle


SECTION: SECTION I; Overseas News; Pg. 6

LENGTH: 1204 words

Julian Ozanne reports on how the Red Sea coast is becoming embroiled in the
tensions of the Middle East conflict

AS THE superpowers continue to disengage themselves from the embattled Horn of
Africa, a new scramble for influence in the region is under way.

Within the last four months, Arab states and Israel have stepped into the vacuum
created by the ending of the Cold War in Africa, and the subsequent dwindling
flow of military assistance from Western and East bloc governments to Ethiopia,
Sudan, Somalia, and their respective rebel groups.

This Arab and Israeli involvement is playing on the region's endemic
tensions:Ethiopia is returning to its centuries-old role as a Christian bulwark
against Islamic incursions into black Africa. The result may well be as complex
and violent as when Moscow and Washington were at loggerheads in the area.

It was Ethiopia's restoration of relations with Israel last November after a
16-year break that marked a critical turning point in the realignment process.

Under heavy pressure from the Soviet Union, its main backer, to reach a
negotiated solution to conflicts in Eritrea and Tigray, and having to maintain
black Africa's largest army, the Ethiopian Government began anxiously looking
around for alternative sources of military assistance. Israel grasped the
opportunity for several reasons:it wanted a foothold in Ethiopia as the last
non-Arab presence on the Red Sea; it was concerned about the increasingly
fundamentalist Islamic Government in Sudan; and it wished to relocate the
estimated 12,000 Ethiopian Jews - called the Falashas - in Israel.

Alarmed Arab states are responding by stepping up arms deliveries to the
secessionist Eritrean rebels.

The strategic importance of the Red Sea coast has long been behind military
intervention in the Horn. Between 1953 and 1977, the US provided military
assistance to Ethiopia in return for naval facilities at Massawa and access to a
communications station at Kagnew, near the Eritrean capital of Asmara.

The Soviet Union retaliated by arming Somalia and Sudan. After the Ethiopian
revolution of 1974 and the emergence of a Marxist regime in Addis Ababa, the two
superpowers swapped sides.

The Soviet Union and Cuba, previously assisting the Eritrean rebels, moved into
Ethiopia at the time of the 1977 Ogaden war against Somalia, while the US
started supplying Somalia and Sudan with military hardware.

Less than a decade later, both superpowers began reassessing their commitments.
US arms supplies to Sudan were cut off in the mid-80s, while last year military
assistance to Somalia was suspended. The Americans also indicated that the naval
facilities agreement for the Somali Red Sea port of Berbera will not be renewed.

Under Mr Gorbachev concessional arms agreements with Ethiopia are ending. Soviet
diplomats in the Ethiopian capital of Addis Ababa are privately saying that the
current four-year Dollars 2bn (Pounds 1.2bn) arms agreement will not be renewed
after it expires on December 31st.he 1,500 Soviet military advisers present in
Ethiopia last May have been cut to 600 and have, since December last year, been
pulled out of war zones.

Last month the Soviets refused to allow their 18 Antonov transport planes
stationed in Addis Ababa to be used to resupply the besieged government garrison
town of Asmara.

Similarly the Cubans, who at one time had 18,000 troops in Ethiopia, took swift
advantage of the superpower rapprochement, and pulled out their remaining
3,000-strong contingent last September.

East Germany was Ethiopia's other staunch East bloc ally, symbolised in the
strong personal friendship between President Mengistu Haile Mariam and Mr Erich

As well as a flow of arms, either as gifts or on concessional terms, East
Germany provided the Ethiopian security police with computers and bugging
equipment, backed up by more than 400 members of the Stasi, East Germany's
secret police force.

At the time of an abortive coup attempt last May, President Mengistu was on a
state visit to East Germany. During that trip he was promised 200
Soviet-designed T55 tanks as a gift. One hundred were delivered before the fall
of Honecker, but the rest of the consignment has since been cancelled. The Stasi
have been recalled home, although some have chosen to stay on.

The increased military links with Israel come against this background. Last
December the Chief-of-Staff of the Israeli Army, Gen Dan Shomron, visited
Ethiopia with a military delegation.

According to military attaches in foreign embassies, the Israelis have supplied
Ethiopia with cluster bombs for use against the Tigray People's Liberation Front
(TPLF), a consignment of Uzis and small arms, and several military advisers. The
range of assistance has apparently been limited, however, by Washington's
insistence that US-origin weapons cannot be diverted to Ethiopia.

Israel's ambassador to Ethiopia, Mr Meir Joffe, denies his country is supplying
military assistance. But he does concede that his Government is increasingly
concerned about the growing Arab military presence in Eritrea, and about
preventing the Red Sea from becoming an Arab sea. 'We want to make sure the
southern outlet of the Red Sea remains secure,' he said in an interview in which
he emphasised the dangers of an Islamic push southwards.

Meanwhile, Israel's presence in Addis Ababa has allowed the secessionist
Eritrean People's Liberation Front (EPLF) to appeal to Arab governments for
assistance. Although the leadership of the EPLF is predominantly Christian, half
the region's population is Muslim.

In the last three months recycled Soviet weapons, including heavy artillery like
122mm Howitzers from Syria and Iraq have been shipped in to the EPLF. The
Libyans have been delivering consignments of weapons including ground to air
Sam-7 missiles, and the Saudis have provided more than 20 light 30ft-35ft hulled
boats with outboard motors, used for the lightning assault on the port of
Massawa last month and the destruction or capture of 12 Ethiopian naval vessels.

In Tigray, the TPLF is also starting to take effective control of the territory.
The overall result, says diplomats in Addis Ababa, could be the break up of
Ethiopia in an atmosphere of increasing Christian-Moslem, Arab-African tension.

The scenario that now seems possible is the emergence of a de facto independent
Eritrea not recognised by the West, which would be forced to turn to the Arab
world for economic assistance.

Inevitably in the Horn, conflicts spill over borders. In neighbouring Sudan,
where a seven-year-old civil war has been waged between the mainly Christian
south and the mainly Muslim north, President Omar el-Bashir claimed last month
that Israeli military advisers were fighting alongside the rebel Sudan People's
Liberation Army.

Like the EPLF, Gen Bashir, an Islamic fundamentalist, is using the Israeli
threat to appeal for increased military support from Libya and Iraq to crush the

'There is going to have to be some hard-headed thinking in Washington and Moscow
about the regional implications of the impending collapse of the Mengistu
regime,' said one Western diplomat in Addis Ababa.

'Arab-African conflicts could present us and the rest of the continent with a
worse nightmare than we have had over the last 30 years."


GRAPHIC: Map, no caption

                   Copyright 1990 The Financial Times Limited

                             2717 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            March 31, 1990, Saturday

Shaming the proliferators



LENGTH: 1368 words

David White on the spread of nuclear weapons

How soon Iraq, or Pakistan, or North Korea could have an arsenal of nuclear
weapons, nobody really knows. That is probably the most unsettling element of
the nuclear proliferation issue.

Does Iraq's alleged attempt to obtain US-made electronic gizmos, specific to
detonation of nuclear warheads, indicate that the country is closer to making a
bomb than previously thought? Or are the media exaggerating the ability of a
country like Iraq or Libya to obtain bomb materials?

This week's incident is both encouraging and discouraging. The US-British
undercover operation provides a demonstrable success for increased international
efforts to police sensitive exports. But, for anyone who does not take Baghdad's
denials seriously, the affair shows up how a country can belong to the Nuclear
Non-Proliferation Treaty, as Iraq does, and still pursue ambitions in nuclear

This is the new dimension of world concern about the spread of nuclear arms. The
NPT, which came into force in 1970 and now covers 141 countries, forbids
signatories that do not have nuclear arms to acquire them, and forbids nuclear
weapon states to help them do so. It has, by and large, worked.

So far, worries have focused on a handful of countries outside the treaty:India,
Pakistan, Israel, South Africa, Argentina, Brazil, all with significant nuclear
capabilities and aspirations, possessing a range of unsafeguarded installations
- either reactors, enrichment plants or reprocessing facilities.

But among some NPT states there have also emerged 'disquieting symptoms,'
according to Dr John Simpson of the Centre for International Policy Studies at
the University of Southampton, a leading expert on proliferation.

These states include North Korea, which appears to have a reactor running and is
still negotiating safeguards with the International Atomic Energy Agency (IAEA).
There was also speculation about Romania's intentions before the overthrow of
the Ceausescu regime.

Iraq and Iran, since their 1988 ceasefire, have turned their attention from
readily-deployable arms to the acquisition of more sophisticated weapon
technologies. However, Iran is considered to be still a long way from nuclear
capability and Iraq is generally thought to be several years off in technology,
and lacking the necessary fissile materials, unless it has obtained them

Iraq's nuclear programme suffered a setback when Israel destroyed the Osiraq
reactor complex in 1981. Its declared nuclear facilities - two research reactors
- are monitored by IAEA inspectors, and all its fuel is safeguarded.

The blaze of US publicity surrounding this week's Heathrow seizure may reflect
the political convenience of singling out Iraq. There have, after all, been
similar cases involving the same kind of equipment bound for Israel and

However, Iraq is among a number of countries that have been developing missiles
that would be capable of carrying at least a small nuclear warhead. The list of
missile-proliferation nations overlaps significantly with known or suspected
would-be nuclear proliferators. India and Israel have both tested
intermediate-range missiles.

Western efforts to obstruct developing countries' missile programmes have had
some success. The Argentine-Egyptian-Iraqi project known as Condor II or Badr
2000 has certainly been hampered, and the missile has never flown. But in
December, Iraq announced the successful test launch of a three-stage
satellite-carrying rocket which could easily be turned to military use.

All these missile programmes rely heavily on foreign technology: whole weapons,
parts or processes.

The Missile Technology Control Regime (MTCR), formally set up three years ago by
seven Western countries, limits the sale of large missiles and related
technology. This is written into their rules for the authorisation of export
licences. But, apart from Spain, which is not party to the MTCR but is following
the same guidelines, the members have failed so far to widen the scope of the
agreement. Negotiations are being held to include all EC countries after 1992,
so that exports are not simply channelled out through non-MTCR members in a
barrier-free Community. There is also hope that the Soviet Union, whose Scud-B
missile has been successfully adapted by Iraq to longer ranges, will provide
crucial support,

Export controls - be they on krytron switches or beryllium for nuclear warheads,
or on carbon-composites or solid-fuel components for rockets - can probably not
prevent development, but they can slow it down and make it much more costly.

Policing is difficult, however, because many products and technologies are
dual-use. In practice it means special scrutiny of all exports to certain

The Middle East is where nuclear worries are most acute. Israel, which unlike
its Arab neighbours is not an NPT signatory, is widely believed to possess some
nuclear weapons, although there is no hard evidence. In a resolution at last
December's General Assembly, the United Nations issued a fresh call for a
nuclear-free zone in the region.

Nuclear rivalry also continues to cause concern in South Asia. Experts are
confused by recent conflicting signals from Pakistan, but it certainly has most,
if not all, of what it needs to make a bomb. India, which exploded one 16 years
ago, is known to have large quantities of plutonium not under safeguards,
although it is thought to have stopped short of building a weapon stockpile.

However, some proliferation fears have eased. Nuclear competition in South
America appears to have subsided. Argentina and Brazil are both thought to have
down-graded military programmes, partly because of cost, and are co-operating
with visits to each other's facilities.

South Africa announced the closure of a pilot plant in February, and there is
some prospect of it adhering to the NPT this year.

There is still no overt proliferation in nuclear arms. India is only country
outside the five nuclear powers to have openly exploded a nuclear device - one
of approximately 1,800 nuclear tests that have taken place since the bombing of

'The problem for proliferators,' Dr Simpson says, 'is how to get from zero to,
say, 20 weapons without bringing the whole weight of the international community
crashing down on them.'

Controls by the IAEA, which acts as the enforcing arm of the NPT, have been
effective to the extent that there has been no proven diversion of safeguarded
materials to military ends.

But the organisation is short of funds and has a wide range of countries to
cover. It is also limited in its powers; it cannot, for instance, make
inspections of industrial sites. Studies are going on within the IAEA on
possible changes in the control system and the impact of new techniques for
enriching uranium.

Extension of the IAEA's competence and powers, however, is bound to come up
against political opposition from non-nuclear-weapon states unless it is
attached to concessions by the nuclear powers. Within the NPT, there is an
underlying resentment among many developing countries, which feel that the
treaty serves to protect the interests of the established nuclear powers,
allowing them to maintain hegemony over nuclear energy development while keeping
their own nuclear arsenals and failing to meet their engagements under the
treaty. Article VI of the treaty commits participants to pursue negotiations on
'cessation of the nuclear arms race' and 'general and complete disarmament.'

At the five-yearly NPT review conference, to be held in Geneva in August, these
issues will be rehearsed at length. There will be pressure for more assistance
to developing countries in peaceful nuclear technology and for curbs on nuclear
testing going beyond the 1974 and 1976 US-Soviet agreements on 'threshold'
limits. Presidents Bush and Gorbachev are expected to sign verification
protocols on these agreements at their planned summit in June.

The conference also has to set the stage for the next, crucial review in 1995,
when the current 25-year span of the treaty expires. But already it looks as if
regional recriminations will dominate the talks.he Middle East will loom large.


GRAPHIC: Drawing, no caption

                   Copyright 1990 The Financial Times Limited

                             2718 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 23, 1990, Friday

Czechs to co-operate in tracking down Semtex

BYLINE: Our Foreign Staff

SECTION: SECTION I; Back Page; Pg. 28

LENGTH: 247 words

BRITAIN and Czechoslovakia will co-operate 'very actively' to track down large
quantities of Semtex, the Czech-made explosive, exported to Libya by the ousted
Communist regime. The Foreign Office made this announcement yesterday, writes
our Foreign Staff.

This follows the disclosure by Mr Vaclav Havel, the Czechoslovakian President,
that his predecessors exported enough supplies of the undetectable explosive to
last international terrorists for 150 years. His country had now stopped
exporting it, he said.

Semtex was responsible for the Lockerbie air disaster - and it has also been the
Provisional IRA's chief method of killing since October 1986.

Semtex's awesome power of destruction was responsible for most of the 224
explosions in Northern Ireland that killed 18 people in 1989.

'The past regime exported 1,000 tons to Libya,' said Mr Havel. 'If you consider
200 grammes is enough to blow up an aircraft, this means world terrorism has
enough Semtex to last 150 years.' President Havel said the present regime in
Czechoslovakia was unable to make Libya return the Semtex.

Later, the Foreign Office said Czech officials had provided details of the 'very
serious' amount of Semtex exports to the British authorities during Mr Havel's

A spokesman said: 'We will be pursuing this with them very soon at official
level. The export of explosives on such a very large scale is very serious and
underlines the need to move forward on marking all explosives.'


                   Copyright 1990 The Financial Times Limited

                             2719 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 23, 1990, Friday

QC named to lead inquiry into miners' strike funds


SECTION: SECTION I; UK News - Employment; Pg. 16

LENGTH: 187 words

LEADERS of the National Union of Mineworkers yesterday appointed a senior QC to
head an inquiry into allegations against Mr Arthur Scargill, the union's
president, over his handling of funds during the 1984-85 pits' strike.

Members of the union's executive appointed Mr Gavin Lightman, a QC who has sat
as a deputy Hight Court judge and who heads disciplinary inquiries for the World
Professional Snooker Association, to conduct the inquiry.

Mr Lightman is to hear evidence in private at his chambers in Lincolns Inn,
London, but the results of the inquiry are to be published after being disclosed
to the NUM members. He is expected to start hearing evidence immediately.

Mr Lightman is not a member of the Haldane Society of Socialist Lawyers,
although his name was one of a number put forward by the society to the NUM
sub-committee charged with setting up an inquiry.

His terms of reference are to find whether funds were received from Libya or the
USSR during the strike; whether any such money remains; and whether home loans
for Mr Scargill and Mr Peter Heathfield, NUM general secretary, were paid.


                   Copyright 1990 The Financial Times Limited

                             2720 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 23, 1990, Friday

Czechs to co-operate in tracking down Semtex

BYLINE: Our Foreign Staff

SECTION: SECTION I; Back Page; Pg. 28

LENGTH: 247 words

BRITAIN and Czechoslovakia will co-operate 'very actively' to track down large
quantities of Semtex, the Czech-made explosive, exported to Libya by the ousted
Communist regime. The Foreign Office made this announcement yesterday, writes
our Foreign Staff.

This follows the disclosure by Mr Vaclav Havel, the Czechoslovakian President,
that his predecessors exported enough supplies of the undetectable explosive to
last international terrorists for 150 years. His country had now stopped
exporting it, he said.

Semtex was responsible for the Lockerbie air disaster - and it has also been the
Provisional IRA's chief method of killing since October 1986.

Semtex's awesome power of destruction was responsible for most of the 224
explosions in Northern Ireland that killed 18 people in 1989.

'The past regime exported 1,000 tons to Libya,' said Mr Havel. 'If you consider
200 grammes is enough to blow up an aircraft, this means world terrorism has
enough Semtex to last 150 years.' President Havel said the present regime in
Czechoslovakia was unable to make Libya return the Semtex.

Later, the Foreign Office said Czech officials had provided details of the 'very
serious' amount of Semtex exports to the British authorities during Mr Havel's

A spokesman said: 'We will be pursuing this with them very soon at official
level. The export of explosives on such a very large scale is very serious and
underlines the need to move forward on marking all explosives.'


                   Copyright 1990 The Financial Times Limited

                             2721 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 23, 1990, Friday

QC named to lead inquiry into miners' strike funds


SECTION: SECTION I; UK News - Employment; Pg. 16

LENGTH: 187 words

LEADERS of the National Union of Mineworkers yesterday appointed a senior QC to
head an inquiry into allegations against Mr Arthur Scargill, the union's
president, over his handling of funds during the 1984-85 pits' strike.

Members of the union's executive appointed Mr Gavin Lightman, a QC who has sat
as a deputy Hight Court judge and who heads disciplinary inquiries for the World
Professional Snooker Association, to conduct the inquiry.

Mr Lightman is to hear evidence in private at his chambers in Lincolns Inn,
London, but the results of the inquiry are to be published after being disclosed
to the NUM members. He is expected to start hearing evidence immediately.

Mr Lightman is not a member of the Haldane Society of Socialist Lawyers,
although his name was one of a number put forward by the society to the NUM
sub-committee charged with setting up an inquiry.

His terms of reference are to find whether funds were received from Libya or the
USSR during the strike; whether any such money remains; and whether home loans
for Mr Scargill and Mr Peter Heathfield, NUM general secretary, were paid.


                   Copyright 1990 The Financial Times Limited

                             2722 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 23, 1990, Friday

Chemicals charge

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 24 words

A West German businessman was charged in Mannheim with breaking export laws by
helping to build Libya's controversial Rabta chemical plant.


                   Copyright 1990 The Financial Times Limited

                             2723 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 23, 1990, Friday

UN mediates in Western Sahara


SECTION: SECTION I; Overseas News; Pg. 10

LENGTH: 654 words

Francis Ghiles examines Javier Perez de Cuellar's chances of breaking a deadlock
between the Polisario Front and Morocco

Finding a solution to the conflict over the status of the former Spanish colony
of the Western Sahara which has, for the past 15 years pitted Morocco against
the Polisario Front, is proving as elusive as ever.

The current phase of the dispute goes back to February 26 1976, when Spanish
adminstration of the phosphate-rich territory formally came to an end. The next
day an assembly convened by the Front proclaimed the independence of the Sahrawi
Arab Democratic Republic in defiance of Morocco's claim on the territory. The
war between Morocco and the Polisario has continued ever since, despite repeated
UN initiatives.

Mr Javier Perez de Cuellar, UN Secretary-General, is due to arrive in Morocco
today on the first leg of a visit to North Africa intended to breathe fresh life
into the mediation efforts he launched 18 months ago. The efforts stalled last
October after Polisario guerrillas launched heavy attacks against the more than
100,000 Moroccan forces stationed in the territory, mainly to protect its vital
phosphate mines. Hundreds died on both sides.

Earlier this year, Mr Perez de Cuellar appointed a new special envoy, senior
Swiss diplomat Mr Johannes Manz, to try to bring the two sides to the
negotiating table. It is, however far from clear that King Hassan of Morocco
wishes to negotiate.

After meeting Polisario leaders in Marrakesh 14 months ago, the monarch insisted
he was prepared 'to discuss but not to negotiate' with the Saharans. Polisario
leaders - referred to as 'Algerian mercenaries' and later as 'wayward subjects'
- argued that meeting the King was tantamount to 'negotiating.'

Despite the argument, which at first seemed purely semantic, senior UN officials
and many observers agreed that the omens were good.

By June however, despite a visit by Mr Perez de Cuellar to Rabat, Algiers and
the Polisario refugee camps, relations had soured. Polisario's offer to free
2,000 Moroccan prisoners was turned down by Morocco which told the Red Cross and
the then Italian Foreign Minister, Mr Giulio Andreotti, (who had played an
important behind the scenes role) that it 'did not form part of the UN peace

Disagreement among Polisario leaders became public in the summer when one of the
movement's important figures, Mr Omar Hadrami, switched his allegiance to King
Hassan. The Polisario Front's 'Saharan Arab Democratic Republic', proclaimed 14
years ago, is now recognised by 74 countries. It took its seat at the
Organisation of African Unity (OAU), in 1984. King Hassan and the Polisario
agree on the need for a referendum in which the people of Western Sahara would
choose between independence and some form of association with Morocco.

But there are sharp differences about the conditions in which it should take

The Saharan leader, Mr Mohammed Abdelaziz, recently took a harder line than
hitherto over the need for all Moroccan officials and military personnel to
withdraw before the vote.

For the Moroccans there is no question of their presence being significantly
reduced, even momentarily. As for the question of who would be entitled to vote
- Polisario claims that more than 165,000 'refugees' are living in Algeria, a
figure disputed by Morocco - much progress has been made since last year.
Algerian leaders undoubtedly want a solution to the Sahara conflict, and are
anxious to build on recently improved relations with Morocco.

But that does not mean they are about to ditch Polisario, which they have
steadfastly supported.

The founding treaty of the Arab Maghreb Union - signed in February 1989 by
Algeria, Libya, Mauritania, Morocco and Tunisia - forbids any of its members
from tolerating activities detrimental to the security of another.

But Polisario attacks within the Western Sahara cannot be construed as violating
that treaty so long as Morocco's presence in the territory has not been
legitimised by the UN and the OAU.


GRAPHIC: Picture, Polisario Front nomads pause during a lull in their guerrilla
war with Morocco for control of the mineral rich Western Sahara

                   Copyright 1990 The Financial Times Limited

                             2724 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            March 20, 1990, Tuesday

France ends Libya rift

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 26 words

France released three Mirage fighter aircraft to Libya, ending its rift with
Tripoli but continuing its defiance of a European embargo imposed in 1986.


                   Copyright 1990 The Financial Times Limited

                             2725 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 16, 1990, Friday

Prices steady as oil ministers gather


SECTION: SECTION I; Commodities & Agriculture; Pg. 40

LENGTH: 643 words

Analysts remain bearish ahead of Opec talks, reports Steven Butler

OIL PRICES steadied yesterday after a long slide as oil ministers from the
Organisation of Petroleum Exporting Countries prepared to meet today in Vienna.

The market has fallen steadily in recent weeks in response to continued warm
weather and high levels of supply coming from the Opec countries. Opec
production is thought to be running in excess of 23.5m barrels a day, compared
with a self-imposed production ceiling of just over 22m b/d.

'We're still quite bearish on a two to three month view,' says Mr Stephen Turner
at Smith New Court.

Many analysts say that the extremely cold weather in the US in December, during
which stocks were drawn down quickly, has postponed but not eliminated the bout
of price weakness that had been widely predicted.

Mr Turner, who believes Brent oil prices could slip below Dollars 17 a barrel
during the second quarter of the year, none the less expects that prices will
average Dollars 18 to Dollars 19 for the year as a whole. Oil prices typically
fall after a period of strength during the winter.

Despite the recent price weakness, the Opec basket of crude remains above the
Dollars 18 'minimum' reference price per barrel agreed by Opec ministers last
November, and has been above Dollars 19 for most of the year.

The ministers are expected to disagree this weekend over the price targets for
Opec oil and particularly, over Kuwait's decision openly to ignore its Opec
quota in an effort to prevent prices from rising too high.

Technically the meeting is of Opec's Market Monitoring Committee, the only remit
of which is to discuss the current conditions in the market. It can also declare
itself to be an extraordinary conference, however, and take action on the
production ceiling, distribution of quotas among members and the reference
price. A number of ministers have said, however, that they do not expect any
decisions on these questions.

Mr Joseph Stanislaw, of Cambridge Energy Research Associates, said that he
expected the ministers to make an effort to keep disagreements private and to
finish the meeting before the weekend was over.

Iraq is hoping to lift the Opec reference price because of difficulties it has
experienced in marketing its own crude oil and because of the relatively lower
prices it fetches, being heavy and sour, or high in sulphur.

It is likely to gain the support of other price hawks, such as Libya and Iran.
Algeria, which is operating at capacity, would also benefit from a higher price
because returns from its gas sales are indexed to oil prices.

Saudi Arabia, the biggest exporter in Opec, has been reported to be broadly in
support of the Iraqi position. Mr Hisham Nazer said in November that he was
sympathetic to calls for moderately higher prices, although he has repeatedly
stressed the need for moderation. Saudi Arabia has recently been discounting its
oil sales in an apparent effort to maintain volume of sales.

The Kuwaiti position favouring early scrapping of individual country production
quotas appears not to have gained support from other Opec ministers. Kuwait's
decision in effect to act as a swing producer so as to bring down prices has
aroused considerable anger among other members which are in desperate need of
higher revenue.

While the ministers are expected to debate these positions through the weekend,
expectations are that decisions will be deferred until the ministerial
conference scheduled for May 25.

Mr Stanislaw said that demand for Opec oil would drop in the second quarter of
this year to between 22m and 22.5m barrels a day. Should oil prices continue to
slide, Opec members producing above quota, such as Kuwait, may be expected to
cut back on production. However, the large amount of oil in ships heading to
market means that any cutback in output, should it occur, may take some months
to affect markets.


GRAPHIC: Graph, no caption

                   Copyright 1990 The Financial Times Limited

                             2726 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 16, 1990, Friday

Gadaffi warns Bonn over factory fire


SECTION: SECTION I; Back Page; Pg. 24

LENGTH: 463 words

LIBYA has threatened economic retaliation against West German interests after a
blaze at a controversial chemicals factory near Tripoli on Wednesday in which
two people died.

Col Muammar Gadaffi, the Libyan leader, warned yesterday that the 'economic
presence of Germany will be eliminated from Libya' if it was found that German
intelligence was involved.

The blaze is said to have destroyed the plant. One official said: 'Libya does
not rule out Israeli or American sabotage.'

Washington said the West Germans disclosed that production of chemical weapons
had begun at the plant at Rabta, 50 miles south-west ofripoli. German
intelligence was quoted as saying that it had manufactured 50 metric tonnes of
mustard gas in the last nine months.

Col Gadaffi warned that Germany would 'lose out' if investigations confirmed its
'involvement in espionage and sabotage in the interests of imperialism and

About 1,000 Libyans demonstrated outside the West German embassy inripoli after
Col Gadaffi's threats were broadcast.

West Germany's economic interests in Libya are confined to oil exploration on a
relatively small scale and a limited involvement in contracting. East Germany
has long had close links with the regime and has been deeply involved in
protecting the Libyan leader.

The Rabta plant became the focus of international controversy early last year
after US establishing a chemical weapons facility there. Libya's vigorous
denials did little to allay suspicions in the international community. Reports
persisted throughout 1989 that West German companies had assisted in planning
and equipping the plant.

Col Gadaffi said yesterday that 'if Libya could manufacture weapons of total
destruction it would not have hesitated . . . because unfortu-nately there is no
law whatsoever to stop any country from manufacturing them. However, Libya on
its own and by its own efforts needs another 20 years to produce a chemical

A Libyan emigre source in Cairo said the blaze at Rabta was preceded by an
explosion, suggesting that it may have been caused by a bomb.

Andrew Fisher, in Frankfurt, writes: West Germanys Foreign Ministry denied any
involvement in the fire and said it had no official knowledge of threats by Col
Gadaffi although it had heard of them from the Libyan news agency.

Mr Jurgen Hellner, the German ambassador in Tripoli, was yesterday told by the
Libyan Foreign Ministry that the country was interested in continued friendly
relations with West Germany.

German imports from Libya, mostly oil, totalled DM3bn (Pounds 1.1bn) last year.
Germany exported DM1.3bn worth of goods to Libya.

The Bonn Ministry said Mr Hellner had been told that the Libyan Ministry
regretted the demonstration and that it had not been official.


GRAPHIC: Map, no caption; Picture, Col Gadaffi, threat of economic retaliation

                   Copyright 1990 The Financial Times Limited

                             2727 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            March 15, 1990, Thursday

US denies Rabta attack

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 49 words

The White House denied any involvement in a fire reported at a plant in Libya
which Washington believes is used for making chemical weapons.he US recently
accused Libya of making chemical weapons at Rabta, south of Tripoli, and refused
to rule out taking military action against the plant.


                   Copyright 1990 The Financial Times Limited

                             2728 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           March 14, 1990, Wednesday

Sentence on UK journalist could hit trade with Iraq

BYLINE: VICTOR MALLET, Middle East Correspondent

SECTION: SECTION I; World Trade News; Pg. 7

LENGTH: 421 words

THE dispute between Britain and Iraq over the death sentence on Mr Farzad
Bazoft, the Iranian-born journalist working for The Observer (London), threatens
to make life even more complicated for British businesses in the Middle East.

UK companies have already been put at a disadvantage elsewhere in the region
because of Britain's lack of diplomatic relations with Iran, Syria or Libya,
although trade continues with all three, despite political differences with the

British trade with Iraq depends largely on official UK credit lines, and
withholding credit is among the actions the British Government might take if
Iraq executed Mr Bazoft, on spy charges, and refused to show clemency to Mrs
Daphne Parish, a British nurse sentenced to 15 years' jail for allegedly helping

Even if Iraq backtracks and the dispute can be resolved, President Saddam
Hussein's government may give vent to Iraqi nationalism by discriminating
against British 'colonial' goods, as some radical Iranian officials have tried
to do in the absence of any formal trade embargo by either Tehran or London.

A further obstacle to good UK-Iraq relations is the continued imprisonment of Mr
Ian Richter, a British businessman who has been serving a life jail sentence
since 1986, for alleged corruption.

Iraq's oil reserves are second only to those of Saudi Arabia, and the country
therefore has good long-term financial prospects.

But for the moment, its foreign debt of some Dollars 35bn (Pounds 20.5bn) to
non-Arab nations makes it hard for the Baghdad government to obtain credit from
other sources, giving Britain what little leverage it has. For an effective
credit embargo, Britain would need the firm support of the European Community,
the US and Japan.

Last year, British exports to Iraq rose to Pounds 450m from Pounds 412m in 1988,
while British imports fell to Pounds 93m from Pounds 176m. The 1989 surplus in
Britain's favour was bolstered by Pounds 340m in lines of credit guaranteed by
the Export Credits Guarantee Department.

This year, Britain allocated only Pounds 250m in credit - none of it so far
drawn down - and officials privately blamed the reduction of Iraqi arrears on
repayment of previous credits. Overall, Iraq ranks about 30th among Britain's
export markets, importing pharmaceutical products and machinery in particular.

The effects of diplomatic disputes on trade vary widely from country to country.
British exports to Libya have been rising, while those to Syria and Iran have
fallen markedly.


                   Copyright 1990 The Financial Times Limited

                             2729 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 12, 1990, Monday

The Soviet Union 6;
From confrontation to partnership



LENGTH: 1574 words

Ian Davidson examines Mr Gorbachev's efforts to realign the basis of East-West

BY COMMON consent, the most remarkable of all the achievements of the wave of
reforms introduced by President Mikhail Gorbachev during the past five years lie
in the field of foreign affairs. His pressure for far-reaching nuclear and
conventional arms reductions is being rewarded by rapid progress in the Geneva
and Vienna negotiations, while in the eyes of the rest of the world his
diplomacy of compromise and sweet reason is transforming the reputation and
influence of the Soviet Union out of all recognition.

The Soviet Union has always been an ideological power, in which ideology and
policy were inseparable, and in which the ideology took as its starting point an
inevitable hostility between communism and capitalism. As a matter of principle,
that has now changed. It is Mr Gorbachevs aim to shift the Soviet relationship
with the West from confrontation to partnership, with the Soviet Union taking
its place in the world community as a country like any other.

In reality, however, the sheer size of the Soviet Union is living proof that it
has not been, and is not now, a country like any other, since it attests to a
scale of geo-strategic expansion up until a very recent past, which culminated
in the creation of the worlds last colonial empire. Many years will doubtless
have to pass before the legacy, first of Tsarist autocracy, then of Stalin and
the Stalinist system of government, can be effaced:and before Mr Gorbachev's
apparent aim, of a stable pluralistic democracy with a technologically advanced
economy, can be realised.

Inside the Soviet Union, the first effect of Mr Gorbachevs policy of
reconciliation with the traditional opponents of the Soviet Union, has been to
sweep away the long-standing fears of nuclear war with the West, which had been
so assiduously stoked up by President Ronald Reagan in the early 1980s, and just
as assiduously denounced by Soviet leaders. Moreover, Mr Gorbachevs increasingly
successful public relations campaign abroad helped, at least initially, to
buttress his reputation at home. But the second effect of his policy of glasnost
and reform has been a blow to national confidence in the virtues of the Soviet

In two respects there is a direct parallel between the effects of Mr Gorbachevs
reforms of domestic and foreign policy. In the first place, the old model has
been discarded before any reliable replacement has been articulated:the foreign
policy of superpower dialectic and ideological confrontation has been thrown out
before there is a working agreement on a less highly-charged alternative foreign

The second parallel is more disconcerting, and it is the widespread expression
among Moscow intellectuals of disillusionment and disgust with the past. Just as
it is now customary to denigrate the shortcomings of the economy and the
failures of the political system, so it has become a mark of sophistication to
dismiss with disdain all the previous geo-political claims of the Soviet Union
in the world.

At the level of idle conversation, it is disconcertingly common to hear educated
Russians mock the grotesque and overblown pretensions of their country,
describing it as 'a Burkina Faso with nuclear weapons'. At the level of serious
discussion with Soviet officials and analysts, it is equally disconcerting to
hear the Soviet Union described as 'a former superpower.'

In purely rational terms, a profound re-evaluation of the Soviet record in the
world was of course long overdue. The political and economic balance sheet of
Soviet backing for the left-wing regimes in Cuba, Vietnam, North Korea, Angola,
Mozambique, Libya, Syria, Ethiopia and finally Afghanistan, is universally

The record of Soviet policies in eastern Europe is even more dismal, considering
that some of these countries are relatively less developed now than they were
before the imposition of communist rule.

Soviet officials appear to believe that Soviet public opinion accepts
comparatively philosophically the wave of revolutions in the other east European
countries, in spite of the implied 'loss' of the geo-strategic gains of the
Second World War.

But the prospective 'loss' of East Germany is an altogether more sensitive
issue. Soviet officials and analysts disclaim any rational grounds for fearing
that a reunited Germany could possibly constitute a real military threat in the
near future to a nuclear power like the Soviet Union; but they assert that
popular opinion in the Soviet Union is still allergic to the spectre of German
militarism, and is still not reconciled to German reunification, because it was
the division of Germany which was to compensate the Soviet Union for the loss of
20m dead in the struggle with the Nazi regime, and to insure against another
such war.

The ordinary Soviet citizens may previously have felt compensated for the
hardship of daily life, by the knowledge that the Soviet Union had played a
leading and heroic role in the defeat of Nazi Germany and pride that it had
since become a nuclear superpower.

The consequence of Mr Gorbachevs new foreign policy, with its search for a
broadly-based reconciliation with the West, is that the terms of the Soviet
Unions external relations have been radically altered in at least three
important ways.

First, the relationship between the superpowers has become a less dominating
feature of the international scene. In the pre-Gorbachev era, when conditions of
the East-West relationship oscillated between confrontation and wary detente,
the axis of the relationship tended to pass through the two opposing alliances,
and even more through the two opposing superpowers:the alliances were compelled
to unite behind their leaders, and their leaders became the protagonists for the
two sides. In the new era of declining perceptions of military threat, in
contrast, the alliances have ceased to be the central interface for the
East-West relationship, and the essential dialogue does not pass exclusively
between the superpowers.

The second innovation, by the same token, is that nuclear weapons have become a
less important currency in the East-West relationship during the Gorbachev era.
In the past, because of the underlying assumptions of their military
confrontation, the highs and the lows of the US-Soviet relationship were
essentially defined in terms of nuclear weapons.

One of the dominant characteristics of the Gorbachev era, is that a far-reaching
reduction in East-West tension has been accompanied, and indeed partly brought
about, by spectacular progress towards the first-ever deep cuts in nuclear
weapons. Paradoxically, however, nuclear weapons are becoming less central to
the East-West relationship, because the relationship is itself becoming less
confrontational and less military.

Before the end of this year, the two superpowers should have concluded a Start
treaty which will cut strategic nuclear arsenals by a notional 50 per cent. The
military significance of such a cut will be marginal, considering the enormous
size of the arsenals which they will still retain; but most of the political
significance will have been achieved early on, in the confidence-building
expectation of such a deal.

Conversely, nuclear weapons will be a less dominant item on the agenda, since
the agenda itself has been enormously enlarged, by the choice of the Soviets,
who have deliberately sought to expand it to include many previously taboo
subjects, including human rights. Moreover, even a very large reduction in
strategic nuclear weapons will be far less significant in security terms for
Europe, than the prospective Vienna agreement, which will eliminate Soviet
superiority in conventional forces in such conditions of verifiability as
virtually to eliminate the danger of surprise attack.

The third innovation, is that the revolutions in eastern Europe have rewritten
the Soviet Unions foreign policy priorities, on a scale and at a speed that no
one could have imagined even as recently as a year ago. Whether or not this was
Mr Gorbachevs intention - it seems unlikely - the changes precipitated by
perestroika and glasnost in eastern Europe, have re-opened all the
long-suppressed questions of Europes political geography, and have put in doubt
many of the geo-strategic assumptions under-pinning the Soviet Unions status as
a superpower.

It is a safe bet, therefore, that the future of Europe, East and West, will
dominate the Soviet Unions foreign policy preoccupations for many years to come.

The main question which seems to be unresolved in Moscow, is what sort of
strategic security system to aim for. Three main ideas appear to crop up in
Moscow talk:a resuscitation of the old dream of collective and demilitarised
security in Europe; some form of condominium derived from the Four Powers
Agreements; or a modified system of strategic balance between East and West.

The appeal of this strategic balance, in which Germany is contained within the
European Community and Nato, but security is guaranteed as much through verified
disarmament as through armaments, is that it may be the only option which is
attainable within the foreseeable future.

At all events, one of the striking features of Moscow talk is the readiness of
some foreign policy specialists to recognise that the European Community has
political as well as economic strengths which may well prove to be a factor of
stability in an unstable world.


GRAPHIC: Picture, Inside the Soviet Union, the first effect of Mr Gorbachevs
policy of reconciliation with Moscow's traditional opponents, has been to sweep
away the long-standing fears of nuclear war with the West

                   Copyright 1990 The Financial Times Limited

                             2730 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            March 10, 1990, Saturday

Miners' leaders agree to inquiry into Libyan cash


SECTION: SECTION I; UK News - Employment; Pg. 7

LENGTH: 353 words

LEADERS of the National Union of Mineworkers yesterday agreed to set up an
independent inquiry by a barrister into allegations against Mr Arthur Scargill,
NUM president, over the handling of funds during the 1984-85 miners' strike.

The NUM national executive agreed unanimously at a five hour meeting to ask the
Haldane Society of Lawyers to appoint a Queen's Counsel to investigate
allegations that money was received from Libya and partly used to pay home loans
of senior officials.

The decision followed calls from executive members and Mr Neil Kinnock, Labour
leader, for an independent inquiry. Although evidence is likely to be heard in
private, executive members said they were happy with the form of the inquiry.

Mr Jack Taylor, the NUM Yorkshire Area president, said a five man sub-committee
would meet the Haldane Society 'to keep it impartial and so that people can't
say that Arthur and Peter Heathfield set it up.' Mr George Bolton, Scottish Area
president, said the inquiry was in the form that Scottish miners had wanted. Mr
George Rees, South Wales Area general secretary, said he was 'very satisfied'
and believed the inquiry was 'not a whitewash at all.'

The executive deferred a vote on whether to back libel actions against the Daily
Mirror and Central Television, which have alleged that Pounds 163,000 was
received from Libya during the strike and partly used to pay home loans for Mr
Scargill and Mr Heathfield.

The proposal for an inquiry headed by a QC was put by Mr Scargill and Mr
Heathfield, who have strongly denied either that funds were received from Libya
or that they used money improperly.

The Haldane Society, which is a group of socialist lawyers, is to be asked to
appoint 'an eminent QC' to investigate the claims. The five man committee
liaising with it includes a balance of supporters and opponents of Mr Scargill
on the executive.

The approval of the Labour Party for the investigation was signalled by Mr Kevin
Barron, Labour's spokesman on the coal industry and an ex officio member of the
executive. He said miners should have confidence in the inquiry.


                   Copyright 1990 The Financial Times Limited

                             2731 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 9, 1990, Friday

Complex deals and French connection to be probed


SECTION: SECTION I; UK News - Employment; Pg. 13

LENGTH: 512 words

ANY INQUIRY following on from today's special national executive meeting of the
National Union of Mineworkers faces a task of formidable complexity involving
bank accounts, organisations and trust funds across the world.

The finances of the International Miners' Organisation in Paris are likely to be

According to Mr Scargill, some NUM debts have been transferred to the
organisation. Clarification of this is likely to be called for.

Bank accounts were said by the Central Television documentary to have been set
up in the name of the IMO before the organisation was even officially launched
after the miners strike ended in March 1985.

The complexity of transactions is illustrated by the alleged repayment of a loan
from the National Union of Railwaymen by the NUM with an IMO cheque from an
Irish bank signed by Mr Scargill, who is the international organisation's

Mr Roger Windsor, former NUM chief executive, claims he received Pounds 29,500
to cover a loan out of money sent by Libya and intended for a miners' hardship
fund known as the Solidarity Fund.

He asks how the IMO could have taken on the debt. His view is that the money
should either be paid back to Libya or into the miners' fund.

Fresh investigation of the Solidarity Fund itself would be unlikely to reveal
anything shocking.

Instead, the controversy surrounds money it is claimed never found its way into
the trust in the first place.

The trustees of the fund were three Sheffield MPs. At the time, they refused to
reveal to receivers who the contributors to the fund had been.

One of them, Mr Richard Caborn, MP for Sheffield Central, says there was nothing
sinister in this.

He says many donations had been made anonymously by people who wanted to give
money not to the strike itself, but to relieve suffering. It was this distancing
of fund money from strike activities which allowed the trust to escape

Another of the trustees, Mr David Blunkett, MP for Brightside and a Labour
national executive committee member, says he would hate there to be any
confusion between the Solidarity Fund and any other trust that had allegedly
been used to cover officials' personal debts.

The trustees says the Solidarity Fund was entirely separate from a trust fund
referred to by Mr Scargill this week. Mr Scargill says that cash was taken out
of a trust fund to repay the NUM for money it had spent on property and so
escape sequestration.

Mr Scargill says that within four days he paid the trust fund back from his own
personal savings. He denies allegations that Libyan money was used to pay off a
mortgage and finance officials' home improvement and bridging loans.

The exact nature of the trust fund referred to by Mr Scargill remains unclear.

One possibility is that it is the building fund which was set up to finance the
NUM's new offices in Sheffield.

The building fund remained outside the sequestrator's remit but would certainly
have attracted attention at the time if it had been used to shift money around
the organisation.


                   Copyright 1990 The Financial Times Limited

                             2732 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 9, 1990, Friday

Libyan denial

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 26 words

Libya denied again that it was producing chemical weapons and said it was ready
to take part in international initiatives against chemical warfare.


                   Copyright 1990 The Financial Times Limited

                             2733 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            March 8, 1990, Thursday

White House accuses Libya of making chemical arms


SECTION: SECTION I; American News; Pg. 6

LENGTH: 257 words

THE US yesterday accused Libya of producing chemical weapons and appealed for
international support to help stop the operation.

A strongly-worded White House statement was issued following an ABC television
report that the plant at Rabta, 50 miles south of Tripoli, had begun producing
mustard gas on a limited basis and would be in a position to assemble small
bombs that could carry the weapons to targets.

Jana, the Libyan news agency, quoted a foreign ministry official inripoli as
denying that the Rabta plant was producing chemical weapons. US concern about
the potential for producing chemical weapons at the plant was first expressed
two years ago, and was reinforced in early 1989 following disclosures about the
involvement of a West German company, straining relations between Washington and

The White House urged 'heightened international vigilance of Libyan procurement
activities and for vigorous efforts to stop the operation of Rabta.'

Mr Marlin Fitzwater, the White House spokesman, gave the standard response on
military action that nothing was ruled out. The immediate US aim is to highlight
the problem and to secure increased international pressure on Libya at a time
when the Tripoli regime has been seeking to improve its external relations.

The US and the Soviet Union are nearing agreement on a ban on chemical weapons
and on the destruction of virtually all existing stockpiles. A major concern on
the US side has been how to prevent other countries such as Libya from producing
such weapons.


                   Copyright 1990 The Financial Times Limited

                             2734 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            March 8, 1990, Thursday

Union to study Scargill funds row


SECTION: SECTION I; UK News - Employment; Pg. 12

LENGTH: 380 words

LEADERS of the National Union of Mineworkers are to consider asking members of
union to rule on allegations against Mr Arthur Scargill, NUM president, over his
handling of union funds during the 1984-85 pit strike.

Both left- and right-wing members of the union's national executive believe the
union should answer critics either by setting up an inquiry or presenting
evidence to NUM members. They will meet tomorrow to discuss the allegations.

A meeting of the executive, which has 15 voting members drawn from the union's
areas and working groups, was called following allegations that Pounds 163,000
was received from the Libyan Government during the strike, and used partly to
pay mortgages and loans.

Arthur Scargill: under fire

Mr Neil Kinnock, the Labour leader, has called for a full public inquiry into
the allegations made in the Daily Mirror newspaper and on a Central Television

NUM executive members are divided on the form of any inquiry should take and
whether it should be public.

Mr Henry Richardson, executive member for the Nottinghamshire area who supports
Mr Scargill, said that an independent inquiry was not needed.

However, Mr Richardson said evidence on the allegations should be put to members
through union branches.

Mr Roy Jackson, Lancashire executive member, said he believed a panel of inquiry
headed by a TUC official, with an independent accountant and a lawyer as
members. Mr Jackson said he did not believe a judicial inquiry was necessary.

Leaders of the South Wales and Scottish NUM areas have said they are disturbed
by the allegations and want to question Mr Scargill and Mr Peter Heathfield, NUM
general secretary. Mr Scargill has denied that any money was received from
Libya, or misused.

Mr Roger Windsor, former NUM chief executive, has alleged that Mr Scargill spent
Pounds 25,000 received from Libya on paying a mortgage on his house. However, Mr
Scargill insists that money paid from a separate trust fund for home
improvements was repaid promptly.

Mr Scargill has dismissed allegations that money was received from Libya and the
Soviet Union during the strike as 'vicious lies.' He said the executive should
decide whether it wants to back legal action against the newspaper and
television company.


GRAPHIC: Picture, Arthur Scargill, under fire

                   Copyright 1990 The Financial Times Limited

                             2735 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            March 7, 1990, Wednesday

Kinnock calls for inquiry over miners' strike cash


SECTION: SECTION I; Back Page; Pg. 26

LENGTH: 372 words

MR NEIL KINNOCK yesterday joined calls for a full public inquiry into
allegations against Mr Arthur Scargill, president of the National Union of
Mineworkers, over his handling of money during the 1984-85 miners' strike.

The Labour leader said there should be an inquiry into allegations that Pounds
163,000 was given to the union by the Libyan Government during the strike and
that some of it was used to pay mortgages and home loans of NUM officials.
Similar calls were made by Mr Norman Willis, TUC general secretary, and NUM

The unanimity on the need for an inquiry into the allegations made by Mr Roger
Windsor, the former NUM chief executive, will increase pressure on Mr Scargill
and Mr Peter Heathfield, NUM general secretary.he two men are to report on the
allegations at a special NUM executive meeting in Sheffield on Friday.

Mr Scargill repeated his denial that any money had been received from Libya, or
that NUM funds were used improperly to pay off mortgages and home loans for him
and Mr Heathfield. He also denied that Libyan funds had been put into a Polish
bank account which was unknown to NUM accountants and of which he and Mr
Heathfield were signatories.

Mr Kinnock said that NUM members and officials would want a public inquiry. Mr
Scargill had an interest in ensuring that 'everything is out in the open.'

The Scottish area NUM voted in favour of a public inquiry and against the NUM
taking legal action against the Daily Mirror or Centralelevision. Mr George
Bolton, Scottish NUM president, said that if Mr Scargill or Mr Heathfield did
not take their own legal action, it would leave 'some very grave questions

The Central Television documentary on Monday night included an accusation that
up to Pounds 9m was made available to Mr Scargill and Mr Heathfield from Libya
through the undisclosed Polish bank account. However, Mr Scargill said he had
not known of, nor been a signatory to, any such account.

Mr Scargill repeated denials that he or Mr Heathfield had acted improperly.
Money transferred from a central NUM trust account to ensure that his house was
not seized by NUM sequestrators during the strike was fully accounted for.

Court ban on striking miners, Page 14


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                             2736 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 6, 1990, Tuesday

Cash problems haunt Scargill again


SECTION: SECTION I; UK News - Employment; Pg. 12

LENGTH: 683 words

John Gapper looks at an unusual aftermath of the 1984 pits strike

MONEY has been a constant problem for the National Union of Mineworkers in the
five years since the strike that failed to hold back the tide of pit closures.
Falling membership has exacerbated the permanent financial problems of a union
that lost up to Pounds 2m during the strike.

It became an even sharper problem for Mr Arthur Scargill, NUM president,
yesterday. Members of the union's national executive called on him to answer
accusations about how he and other senior officials handled money allegedly
contributed while the union was threatened with sequestration.

The more recent financial problems of the union are linked to its waning
fortunes since the strike. A fall in membership from 200,000 before the strike
to 60,000 today has created a severe financial squeeze. In turn, nearly half the
full-time officials have been made redundant.

Although Mr Scargill and other senior officials exercised considerable financial
autonomy during the strike, he has lately been frustrated at the independence of
the union's regions. The regions hold the bulk of the union's Pounds 13m assets,
and national officials cannot control it.

Money is among the problems standing in the way of a merger with theransport and
General Workers' Union, which Mr Scargill once predicted could take place by the
end of last year. Another problem is Mr Scargill himself. 'The only difficulty
with the NUM is one man,' says aGWU official.

Mr Scargill wants the NUM regions to give up some of their autonomy to allow a
financial restructuring that would restore the union to a sound footing. But
strained relations make this unlikely. 'We took the view that if he had no
money, he could not launch a campaign,' says a former executive member.

The union's current financial problems stem from the 1984-85 strike. Combined
with the hardship that many striking miners and their families endured, that
makes the accusations against Mr Scargill and Mr Peter Heathfield, NUM general
secretary, potent even long after the event.

'We've always had a crisis since the strike. It's been one crisis after
another,' says Mr George Rees, South Wales general secretary and a member of the
national executive finance committee. The first of these rolling crises came in
late 1984, the time covered by the allegations.

The threat of sequestration, on October 25, had hung over the union since the
autumn, and led to the executive being given little information about finance.
'It was acknowledged that emergency funds would be dealt with separately to
avoid problems,' says Mr Trevor Bell, former executive member.

This Chinese wall meant executive members knew little about the fate of
donations from Britain and abroad. As court proceedings at the time show,
attempts to avoid sequestrators drew officials into a web of financial
transactions which blurred the boundaries of personal and union accounts.

Mr Heathfield sold his union-supplied car to Mr Roy Lynk, then financial
secretary of the Nottingham area, for Pounds 9,000 on a promissory note
deferring payment until 1987. NUM regions were also distributing donations to
accounts outside the union in order to avoid these being frozen by

Two years ago, an action by the NUM receiver against Mr Scargill and other
officials over their handling of NUM funds during the dispute was settled. The
union's trustees accepted that Pounds 30,100 paid to Mr Scargill out of union
funds in August 1984 was his money, paid previously into union accounts.

Mr Roger Windsor, then NUM chief executive, visited Libya at this time to meet
Colonel Gadaffi. Simultaneously, Soviet miners were sending donations - often in
the form of clothes and other items - for striking miners' families. The
executive assumed that all donations were being handled correctly.

Mr Bell now says the executive should have ordered a review of financial
management during the strike after it ended. 'In the aftermath of the collapse
of the strike, nobody felt like a post-mortem,' he says. But five years after
the death of the strike, a belated post-mortem is under way.


GRAPHIC: Picture, Peter Heathfield and Roger Windsor, little information

                   Copyright 1990 The Financial Times Limited

                             2737 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 6, 1990, Tuesday

Scargill calls Libyan cash allegations 'lies'


SECTION: SECTION I; Back Page; Pg. 22

LENGTH: 432 words

MR Arthur Scargill, president of the National Union of Mineworkers, yesterday
denied allegations that senior NUM officials had personally gained from a Pounds
163,000 donation claimed to have been made to the union by the Libyan Government
during the 1984-85 miners' strike.

The NUM said accusations in the Daily Mirror were 'nothing but vicious lies.' It
said no money was received from Libya during the strike, and no donations had
been used for the 'personal needs of national officers.'

Mr Scargill and Mr Peter Heathfield, NUM general secretary, are to report to a
special meeting of the union's executive. However, one NUM executive member
called for both men's suspension while an independent inquiry was held. Mr Jim
Dowling said that such serious allegations against senior union officials
required an independent investigation.

Mr Scargill said the report quoting Mr Roger Windsor, the former NUM chief
executive who now lives in France, was 'beyond my understanding.'

He said he had not used any money to pay personal debts, and had foregone his
salary for 17 months during the strike.

Referring to a Central Television documentary on the issue last night, Mr
Scargill said:'We shall most definitely be consulting our lawyers, particularly
in respect of the very libellous statement made about the payment of a mortgage.

A statement from the NUM rebutted Daily Mirror and television allegations,
calling the newspaper accusations 'lies and distortions.'

It said that if Mr Windsor, who visited Libya on the union's behalf during the
strike, had received money from Libyan sources then he had lied about it at the
time to Mr Scargill and Mr Heathfield.

The union also said allegations that cash from Libya had been used to pay a
Pounds 25,000 mortgage for Mr Scargill and a home improvement loan of Pounds
17,000 to Mr Heathfield were incorrect. Neither man had a mortgage or a loan, it

Instead, the statement said money spent on improving the union-owned houses had
been repaid to the NUM from a trust fund when officials became worried that the
properties would otherwise be seized as part of the union's assets.

MPs, including Mr Kim Howells, who was an NUM research officer during the
1984-85 strike, joined NUM executive members in calling for an inquiry into the

The allegations follow the resignation of Mr Windsor from his NUM post last
summer for personal reasons. An inquiry into the union's internal finances is
being carried out by South Yorkshire police after a complaint by Mr Scargill.

Cash problems haunt Scargill again, Page 12


GRAPHIC: Picture, Arthur Scargill, report 'beyond my understanding'

                   Copyright 1990 The Financial Times Limited

                             2738 of 2746 DOCUMENTS

                        Financial Times (London,England)

                             March 5, 1990, Monday

Miners' leaders call for meeting

BYLINE: MICHAEL SMITH, Labour Correspondent

SECTION: SECTION I; UK News - Employment; Pg. 10

LENGTH: 352 words

LEADERS of the National Union of Mineworkers are to be pressed to convene an
emergency meeting of the union's executive after weekend accusations about money
which is alleged to have been sent from the Soviet Union and Libya to help
miners during their national strike in 1984-5.

Mr George Rees, general secretary of the South Wales NUM, said yesterday that he
and other members of the national executive wanted an urgent meeting to discuss
investigations by the fraud squad into the union's finances and allegations that
millions of pounds of Soviet and Libyan money was received during the miners'

The NUM is scheduled to meet next on April 2 but Mr Rees said he was not
prepared to wait that long, particularly in view of the union's declining
membership and recent redundancies among NUM staff.

Police in south Yorkshire said yesterday they were conducting a complex inquiry
into a complaint made by Mr Arthur Scargill, president of the NUM. Last October
the NUM called in the fraud squad to investigate 'serious matters' involving a
former employee, thought to be Mr Roger Windsor, the union's former chief

Mr Windsor quit his Pounds 18,000-a-year job last summer for personal reasons.

The Mirror Group of newspapers is running a series of articles about money the
NUM is said to have received from the Soviet Union and Libya during the strike.

Reports of missing millions will also surface tonight in Where Did The Money Go,
which has been made for Central TV by Roger Cook, the journalist.

Mr Scargill said yesterday that the NUM did not receive any money from the
Soviet Union during the strike and that there was evidence available to prove
this conclusively. National leaders of the union were 'unaware' of any funds
emanating from Libya.

Mr Scargill said that during the course of the miners' strike all monies brought
into the national office either by organisations, individual members of the
public, or members of staff, were recorded.

All cash received during the strike was used for the purposes of hardship or in
accordance with the wishes of the donors.


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                             2739 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           February 20, 1990, Tuesday

Hanoi may see thousands return from E Europe


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 537 words

THE FUTURE of Vietnamese in Eastern Europe could become an even bigger headache
for the Hanoi Government than the 40,000 boat people the British Government
insists it will send back from Hong Kong, diplomats said in Hanoi yesterday .

Several East European countries are watching closely negotiations this week
between Mr Francis Maude, Minister of State at the Foreign Office, and the
Vietnam government over the forced repatriation of Vietnamese from the British
colony, they said .

Vietnamese officials have confirmed that more than 200,000 workers are in the
Soviet Union and Eastern Europe, including Czechoslovakia, East Germany and
Bulgaria. The export of labour has been one of the main channels used by Vietnam
for reducing its heavy indebtedness to socialist trading partners, and there are
thousands more of its workers in Iraq, Algeria, Libya and Mozambique. In the
wake of the political changes sweeping Eastern Europe, the first indications are
reaching Hanoi that several host governments, particularly Czechoslovakia, would
like soon to begin sending back their Vietnamese workers.

There are fears that some of the Vietnamese might resist repatriation, a
sensitive issue for the host governments in the prevailing political atmosphere.

The Vietnamese Government, which claims to have been shocked by the
international outcry over the first forcible repatriation of 51 boat people from
Hong Kong on December 12, said yesterday that the talks between Mr Maude and Mr
Dinh Nho Liem, the First Deputy Foreign Minister, had been held in a
'constructive and co-operative spirit.'

Mr Maude, who has responsibility for Hong Kong, said last night that 'a little
progress' had been made, and that discussions will continue today. British
officials are adamant that it is not a question of whether, but when, further
Vietnamese are sent back from Hong Kong.

Vietnamese officials, however, have their eyes set firmly on a thawing of
relations with the US as the trigger to the start of large-scale international
aid and are wary of being seen to co-operate with a British scheme so vigorously
opposed by Washington.

The British hint of modest amounts of aid if Vietnam accepts its 'international
obligations' - that is, by taking back the boat people - may not be seen in Hong
Kong as a sufficient inducement.

Vietnamese officials have also been stressing that, with an estimated 7m of
their 35m workforce either without jobs or under-employed, the prospects are
bleak for anyone being forced to return home. This is in addition to the more
than 1m young people whom they say are entering the job market for the first
time each year.

John Elliott adds from Hong Kong:he first Vietnamese boat person to commit
suicide in a Hong Kong detention centre died on Sunday night, two days after he
hanged himself by his belt and four days after his appeal against repatriation
to Vietnam had been rejected by an appeals body.

He was Mr Nguyen Van Hai, aged 28, who was being kept in Whitehead detention
centre, one of Hong Kong's biggest high security centres.

Mr Nguyen left a note which said he was killing himself as a protest against
what he regarded as the unfairness of the colony's screening policy.


GRAPHIC: Picture, Maude, some 'progress'

                   Copyright 1990 The Financial Times Limited

                             2740 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          February 7, 1990, Wednesday

Sri Lankan Moslems look abroad;
Tamil Tigers take control of eastern area


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 551 words

SRI LANKA'S latest ethnic problem - the plight of the Moslem minority - promises
to involve the entire international Moslem community.

The problem is in the ethnically mixed eastern part of Sri Lanka which has been
merged with the Tamil-dominated northern province into a single administrative
unit. As the Indian peace-keeping force withdraws the battle-hardened and
well-equipped Tamil Tigers are taking full control of the province.

In the eastern sector the Tamils are the majority with Moslems comprising a
third and the Sinhalese, who dominate the island, 25 per cent. The Moslems are
leaving, voluntarily or involuntarily.

The Sri Lanka Moslem Congress (SLMC) has decided to 'mobilise Moslem opinion
internationally,' according to Mr M.H. Ashraff, the party's leader. A delegation
is already in Tehran for the anniversary celebrations of the Iranian revolution
and will go on to visit Arab countries, including Saudi Arabia.

Representations have already been made to the ambassadors of Pakistan,
Indonesia, Bangladesh, Malaysia, Iran, Iraq, Egypt and Libya in Colombo,
together with the Palestine Liberation Organisation which was recently granted
embassy status.

Asked whether the delegation would seek help with arms supply, Mr Ashraff
replied angrily:'That is a foul canard spread by the Tamiligers.'

Under the terms of the 1987 peace accord the eastern and northern provinces were
merged on the understanding that after one year a referendum would enable the
eastern population to say whether or not it wanted the merger dissolved. The
SLMC would have recommended a vote against demerging if its demand for a third
of the seats in the council had been granted. Having defied 60,000 Indian troops
for two and half years, the Tigers are in no mood to share anything with

In any case, the failure of the Indian peace-keeping force to end the violence
made a referendum impossible.

The northern based Tigers slipped into the east as soon as the Indians pulled
out. Before they left, the Indians had trained and equipped aamil National Army
under the guise of a police force. This TNA was controlled by the pro-Indian
EPRLF Tamil group and its allies, rivals to the dominant Tigers.

Having branded the TNA 'India's Contras' and 'traitorous conscripts', the Tigers
mercilessly mauled the TNA and then in a brilliant dawn operation, 600 Tigers
surrounded and seized Batticaloa , the eastern the provincial capital, with
hardly a skirmish.

The Tigers are now running the entire province, east and north, imposing taxes,
extorting money from rich Moslem traders, confiscating property, introducing
by-laws and kidnapping or killing Tamil opponents. The Sinhalese have fled to
Sinhalese villages and towns in neighbouring provinces.

In the past three months, President Premadasa and senior ministers have had
direct talks in Colombo with leading Tiger leaders but not with their commander
in chief, Mr Velupillai Prabhakaran. The Tigers' leaders are always state
guests, staying in five star hotels and using government helicopters.

In the past all parties formed by the Moslems, a community spread thinly on the
north-west and southern coastline, have been Colombo-based. The SLMC is the
first party to rise from the east, which has the largest concentration of


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                             2741 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 20, 1990, Saturday

Maghreb's reluctant summiteers to meet


SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 352 words

THE Arab Maghreb Union is a club which has got off to an unpromising start.
Founded last February, it brought together Algeria, Libya, Mauritania, Morocco
and Tunisia.

Tomorrow it starts only its second meeting. Tunisian President Zine El Abidine
Ben Ali, who is to host the meeting, had found it difficult to get members to
agree to a date, not least because Colonel Moammer Gadaffi, the mercurial Libyan
leader, who always purports to be keen on union among Arab states, appears to
have lost all interest in North Africa. 'He is having a fling with an old
mistress,' commented one diplomat of the Colonel's now rekindled love affair
with Egypt.

Two other conflicts have also soured relations between members who though they
are all committed to the Union, disagree on what form it should take. What, 12
months ago, looked like the promise of a real dialogue between King Hassan and
the Polisario Liberation Front, broke down in June when the Moroccans refused
Polisario's offer to release 200 of the estimated 2,000 Moroccan prisoners. The
resulting stalemate led Polisario guerrillas to launch attacks last autumn, in
which hundreds died on both sides, against the royal army in the Western Sahara.

The Moroccan monarch feels he is in a strong position and has little room
domestically to make concessions. The turmoil in Algeria, which remains the
Polisario Front's major backer, has reinforced the conviction of many Moroccans
that their best bet is to sit tight and wait for Polisario to disintegrate. The
stalemate has led to a deterioration in relations between Algeria and Morocco
but not to any serious threat to diplomatic relations, which were only
re-established in 1988 after a 12-year break.

Relations between Morocco and Mauritania have sharply deteriorated as a result
of the bloody conflict between the latter and Senegal. Mauritania feels King
Hassan has taken a pro-Dakar stance.

A third factor is also at play. Algerian leaders, who traditionally are power
brokers in the region, are absorbed by the political and economic reforms
ushered in by the riots of October 1988.


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                             2742 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 18, 1990, Thursday

Korean construction group in 50m dollars issue


SECTION: SECTION I; International Capital Markets; Pg. 39

LENGTH: 303 words

DONG AH Construction and Industrial, Korea's second largest construction company
after Hyundai, launched a USDollars 50m convertible Eurobond yesterday to
finance its overseas operations.

The issue carries a coupon of 1 to 1 1/2 per cent with a conversion premium of
65 per cent to 75 per cent. Final pricing will be decided tomorrow.

Swiss Bank Corp, which is joint lead manager with Dong Suh Securities, said it
was only the eighth convertible issue to be permitted by the Korean authorities,
which fiercely restrict foreign shareholdings in Korean companies.

The Eurobond issue carries a five-year put option, which yields 5 1/4 to 5 3/4
per cent in February 1995. It is callable from January 1 1992, with a 104 per
cent yield in the first year declining annually to be callable at par in 1995.

Dong Ah's overseas operations have usually generated more than half the group's
turnover, although the domestic construction market is increasing rapidly.

Most of Dong Ah's overseas work has been in the Middle East, where the group's
access to cheap labour from Thailand, and more recently countries such as
Bangladesh and India, has given it a competitive advantage.

Dong Ah is the largest export earner in the construction sector. Its overseas
order book is currently worth more than USDollars 6.5bn.

Its biggest contract is as the main contractor on the Dollars 3.6bn first phase
of the Great Man-made River development in Libya. This water supply and
irrigation project, when completed next century, is projected to have cost more
than Dollars 27bn - making the Channel tunnel look small by comparison.

Dong Ah has recently received a letter of intent for the Dollars 4.6bn second
phase of the project.

The issue was well received yesterday in a thin market, where it was trading at
104 1/4 to 105.


                   Copyright 1990 The Financial Times Limited

                             2743 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          January 17, 1990, Wednesday

Defence 2;
Unequal shares - Europe



LENGTH: 1113 words

TWO forces have been pushing the pace of the East-West disarmament process - the
Gorbachev effect with all its repercussions, and the US budget. The European
Nato allies have been mesmerised by both.

West European defence ministers, faced with a sharp scaling down of US military
spending plans, have tried to fend off the threat of emulative cost-cutting. At
their last meeting in November, they were at pains to show the US as a unique
case because of the legal constraints on the budget and the sheer size of the US
defence bill.

A year earlier, they had been mustering their answers to a US campaign on
burden-sharing - the question of whether the Europeans are doing their bit. On
the face of it, the relaxing of East-West tensions and the impending arms cuts
should ease the friction over burden-sharing. But that is far from clear. If all
countries reduce alike, the issue will not be resolved. And in the context of
declining US concern about potential threats to European allies, it could get

A sense of unfairness in the distribution of defence responsibilities continues
to smoulder in US public opinion and in Congress, aimed at both Japan and
western Europe.

Ill-feeling has been worst when Americans have felt let down by allies in their
failure to lend moral or other support for US military operations - especially
the raid on Libya in 1986. Again with the invasion of Panama last month, the UK
was a notable exception among the allies in proclaiming immediate approval.

Squabbling about who should foot how much of the bill for Europe's defence has
been going since the 1960s. Per head of population, only three allies - France,
Britain and Norway - spent more than half of what the US was spending on defence
in 1988.

Basing troops in Europe rather than at home is reckoned to add between 10 per
cent and 15 per cent to the US defence bill. But up to 60 per cent of the
current budget can be calculated as being in some way directly related to
Europe. This figure - some Dollars 180bn - is more than the rest of Nato's
defence budgets put together.

Although support for Nato remains strong in the US, public opinion polls
consistently call for the Europeans to spend more. But there is no sign of them
doing so.

European defence budgets, apart from modernisation phases among the poorer
members, have been mostly flat. Nato maintains, officially, a goal of 3 per cent
annual increases in real (inflation-adjusted) terms, but there is no prospect of
achieving it alliance-wide.

West Germany's defence spending could be down in real terms this year. France
has cut back on its plans for increased expenditure. Britain, after a period of
flat or less than flat budgets, plans growth of Pounds 2bn over the next two
financial years, to more than Pounds 22bn, but analysts warn that the forecast
real-term increases - of 1.9 and 1.7 per cent - may be eaten up by inflation.

As for the smaller allies which came under the heaviest US criticism, Denmark
has stuck with a zero-growth budget and Belgium is continuing to reduce its
financial commitment in real terms, deciding to update its current tanks and
fighters rather than join expensive new armament projects.

A Nato progress report on burden-sharing in November warned members against
'reductions in commitments in anticipation of the future or to achieve
short-term financial gain.' It warned that the quality of the forces remaining
after a Vienna conventional arms treaty would need to be 'sustained and

Interestingly, the clearest warning about expectations of defence savings came
from Bonn. Mr Gerhard Stoltenberg, the West German Defence Minister, said it
would be 'a mistake' for Europe to draw the consequence from the US spending
plans that all allies should cut back. After a Vienna treaty, he said, the
Europeans would have to take a relatively bigger share of the burden.

The Europeans have argued that they provide 95 per cent of Nato's divisions in
Europe, 90 per cent of its manpower and artillery, 80 per cent of its tanks and
combat aircraft, 65 per cent of its major warships and a lot of intangible

But the 1988 burden-sharing report, Enhancing Alliance Collective Security,
still found 'glaring differences' between allies, and called on members both to
provide more resources and make more efficient use of them. This would include
better co-ordination and, in the longer-term, specialisation among allies.

Industrial specialisation would be one logical consequence of the more open
market proposed by the Independent European Programme Group (IEPG), to which 13
European Nato countries belong, including France. But this has so far made very
modest progress. By the end of 1989, all members were supposed to be publishing
contract opportunities so that companies in other countries could bid for them.
But apart from Britain and France, none were yet doing so.

France has meanwhile been leading the drive for a European defence research body
modelled on the US example.

European and pan-Nato collaboration has taken something of a battering in recent
months, with defections from a Nato frigate project, the break-up of a joint
plan for conventionally-armed stand-off weapons for aircraft, problems over new
air-to-air missiles to replace standard Nato weapons and Anglo-German
disagreement in the European Fighter Aircraft project.

But the economic and political arguments for European defence collaboration
would now seem to be stronger than ever, with the US clearly favouring any move
that improves the efficiency of the European effort.

This would include support for nuclear weapon co-operation between Britain and
France, which would be a significant new departure. President George Bush made
clear in May last year that Washington 'welcomed' Anglo-French moves in this

Co-operation on a stand-off nuclear missile, carrying different national
warheads, has been under discussion for two years. The plan for a new
air-launched nuclear weapon has since taken on extra importance, as prospects
for a Nato agreement on new ground-launched nuclear missiles in Europe diminish.
Unlike ground-based weapons, there are at present no proposals for disarmament
talks covering missiles carried by aircraft.

The early stages involved trilateral talks between the UK, the US and France,
but Britain is now weighing bilateral options involving development of either a
US weapon or France's ASMP missile, already in service. The French option,
discounted at first because it did not meet the RAF's range requirements, has in
recent months been revived as a serious candidate:more costly but with clear
political benefits.


GRAPHIC: Chart, no caption; Chart, no caption; Picture, VSEL's 155mm howitzer
which it hopes to sell to the US

                   Copyright 1990 The Financial Times Limited

                             2744 of 2746 DOCUMENTS

                        Financial Times (London,England)

                          January 17, 1990, Wednesday

Formula for success eludes economies of the Middle East


SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 1070 words

Arab countries are facing a debt crisis and are having to begin restructuring
their economies. Michael Field, in the first of a series of six articles, looks
at the region's economic weakness.

In an economic sense the 1980s passed the Arab world by. There was no talk in
the region of 'deregulation and liberalisation', 'greater reliance on market
forces,' 'privatisation' or any of the other formulae being adopted by
successful economies elsewhere.

Between the oil price explosion of 1973 and the end of the 1980s the Arab world
received Dollars 1.5 trillion (million million) in oil revenues, yet no Arab
country came anywhere near the stage of economic take-off seen in the
fast-growth countries of the Far East.

The Arabian peninsula producers, Saudi Arabia, Kuwait, the United Arab Emirates
and Qatar, which account for only 7 per cent of the Arab world's population but
the bulk of its oil receipts, used their incomes to create superb
infrastructures, lavish welfare states and rich populations. In the process they
made it almost impossible for domestic industry to compete with imports, unless
it was given large subsidies. It is only after five years of recession - and
only in Saudi Arabia, which has the lowest revenue per capita - that this
situation is beginning to change.

The poorer Arab states, which as well as having some small oil revenues of their
own received a large flow of aid, investment and remittance money, picked up the
bad habits of the rich. Their governments were able to build smart
infrastructure projects, subsidise their people's food and energy and guarantee
jobs for graduates. Their private businessmen went into importing and

Everywhere the private sectors were closely supervised, which meant that in the
poorer states they were excluded from the most important parts of the economies.
Businessmen retained the mentality of traditional Middle Eastern merchants and
royal hangers-on. The standard approach to making a fortune was for a
businessman to get as close as possible to his government and use influence to
win a contract.

Now debt is forcing a change in all these attitudes. During the early and
mid-1980s the poorer Arab governments supplemented their flows of foreign income
by borrowing heavily and by 1988 their combined debt had reached Dollars 140bn.
Last year it was Dollars 136bn. Compared with the debts of Latin America the
amounts are not enormous and the terms are generous. The total Arab debt is not
much more than Brazil's Dollars 120bn.

Most Arab debt is owed to governments - mainly Arab governments - and an
unusually high proportion of it is in the form of very soft loans from Arab aid
institutions, which charge rates as low as 2 per cent.

The worrying feature of the Arab debt is that it represents an average of two
thirds of the countries' gross domestic products and more than 100 per cent of
GDP in Egypt, Sudan, Jordan and Morocco. In the last two years a growing number
of Arab countries have been forced to reschedule under IMF-Paris Club
arrangements, which have obliged them to reform their financial administration
and restructure the private/public sector balance in their economies.

Some countries have introduced reform packages just before they would have been
forced to approach the Fund.

The standard medicine has included: the reduction of budget deficits and the
financing of what deficits remain from commercial sources rather than printing
money, the liberalisation of interest rates in the commercial banking system,
the depreciation of their currencies to realistic market rates, and the
elimination or reduction of price controls and subsidies.

Attempts are also being made to involve the private sector in more parts of the
economy and to free it from long licensing procedures, price and exchange
controls and import and employment restrictions.

Both the austerity measures and the emphasis on the role of private business are
leading governments to liberalise politically. 'They want to give their people
some choice in how they should suffer,' as a Jordanian economist put it
recently, and they realise that if the private sector is to respond to pleas
that it invest more at home it will have to be given a say in economic policy

Elections and referenda have been held or political parties legalised recently
in Jordan, Tunisia and Algeria.

In Egypt, where the political climate became stricter in the later days of
President Sadat in 1980 and 1981, there has been a steady liberalisation under
President Hosni Mubarak. The country now enjoys a totally free press.

The countries which remain rigidly controlled both economically and politically
are Libya, Iraq and Syria.

In Iraq there have been moves to privatise a few state enterprises and some talk
of political liberalisation, though in reality under the present regime
political changes could only be cosmetic.

In none of these countries could there be real economic or political reform
without the regimes being swept away.

Even in the rest of the Arab world the pace of change is expected to be slow.

One problem is that unfortunately the Arab economies do not complement each
other. In theory Saudi money combined with Sudan's population and agricultural
potential should produce a successful farming industry, while Gulf money and the
Egyptian population should produce successful manufacturing industries.

In practice the enormous bureaucracies of the recipient countries are still
liable to delay projects to the point of making them uneconomic. In one or two
cases - Sudan is the classic example - the infrastructure is so rudimentary that
building and operating an industrial project or a hotel in an economic fashion
is made impossible.

In others the labour force is not sufficiently skilled or the domestic market is
too poor to buy its products.

An equally fundamental problem is that Arab businessmen are traders rather than
investors, an attitude which stems partly from the fact that their region is

Private businessmen from the rich Arab countries are estimated to have Dollars
120bn held abroad, and businessmen from the poor countries, excluding long-term
emigrants, are thought to hold at least Dollars 50bn.

In the last 18 months there has been some return flow of capital to Saudi Arabia
as that country has moved out of recession, but it is not expected that there
will be a wholesale return of capital to the Middle East until the process of
democratisation has gone much further.

Further articles in this series will look at Jordan, Morocco, Tunisia, Egypt and


GRAPHIC: Map, no caption; Illustration, no caption

                   Copyright 1990 The Financial Times Limited

                             2745 of 2746 DOCUMENTS

                        Financial Times (London,England)

                           January 13, 1990, Saturday

Living in fear of the mosque



LENGTH: 2174 words

Fundamentalism or reform? Michael Field tours the Arab world

'They cannot do much more to make us look Islamic,' said a vivacious Jordanian
girl shortly after the parliamentary elections in November. 'Between every
mosque and the next mosque they've already built two more mosques.'

MOSQUE BUILDING, televised prayers and an insistence on even more religion in
schools has been the reaction of governments throughout the Moslem world in
recent years to the pressures from militant Islam.

Now, the middle classes, particularly in countries such as Algeria orunisia with
long secular traditions, are wondering anxiously what may follow the mosque
building. Will it be strict Koranic law, which would remove the civil liberties
women have won in the last 40 years? Will it be prohibition? Or could it be the
abolition of interest in the banking system? These questions become especially
frightening at a time when when an Algerian Islamic leader can say that a woman
should leave her house just three times:'To be born, to be married and to be
taken to the grave.'

This is the face of the Islamic revival that frightens people in the West. They
think of Ayatollah Khomeini's death sentence on the writer Salman Rushdie, the
assassination of President Sadat of Egypt and the bombing campaigns of Islamic
revolutionaries which have terrorised almost every capital city in the Middle
East during the 1990s.

Yet there is another way of seeing political Islam: as just one of the
conflicting pressures for change in the region. Many educated Arabs hope that
this change will give birth to a new liberal economic and political order, like
that emerging in Eastern Europe. Although few expect a sudden wave of revolution
and reform,such as that in the Communist world, Arabs have been watching events
in those countries with anxious fascination. Like the Communist empire, the Arab
world is badly governed. Arab governments have no respect for human rights.
Imprisonment without trial and torture are commonplace. The most brutal,
nominally socialist, regimes in Syria, Iraq and Libya react to any threat by
killing their opponents.

Arab governments have involved their peoples in pointless wars such as Iraq's
invasion of Iran in 1980. They are almost all extremely corrupt - Kuwait is an
exception. There is a growing gap between the rulers and ruled. Whereas in the
1950s and 1960s revolutionaries such as Nasser in Egypt and Ben Bella in Algeria
were seen as representing the aspirations of their peoples - even if their
actions were often misjudged - nowadays the idealism is gone.

In this unhappy situation, the catalyst for change is the failure of the
countries' economies, as indeed it proved to be in Eastern Europe.

During the 1970s and early 1980s Arab countries learnt to live beyond their
means. The Gulf countries with big oil production and small populations enjoyed
unusually high oil prices. The other Arab countries benefited from a mixture of
their own smaller oil revenues, the remittances of their workers in the rich
countries and Gulf aid and investment. They were able to embark on grand
construction schemes, subsidise their people's food and energy and guarantee
school leavers jobs in government. Jordanian and Egyptian businessmen, bringing
back money from the Gulf, built glossy properties or set themselves up as
importers of luxury goods. Few invested in new industries. They developed
societies which were good at consuming but not at producing.

While the boom continued it seemed safe to borrow abroad, but in 1986-88, as the
oil price fell, the aid stopped and the remittances dwindled, it was realised
that the Arab world had a debt crisis. In some countries - Egypt, Morocco,
Jordan and Sudan - by 1988 foreign debt was more than gross national product.

The economic policies needed to meet this problem have either been imposed by
the International Monetary Fund as part of debt reschedulings or have been
adopted by governments a bit before reschedulings would have been necessary. The
medicine is much the same in every country. It includes:he gradual elimination
of government budget deficits.

The removal of subsidies.

The floating of currencies - artificially high parities encourage consumption
and imports.

The payment of real rates of interest by the banks, to encourage saving and
discourage capital outflow.

The greater involvement of the private sector.

All of these policies have political implications. People who are told that
their countries are virtually bankrupt and that the prices of the commodities on
which they depend are to be raised lose faith in their governments. In Jordan,
in April last year, there were riots in the part of the country that is normally
most loyal.

Likewise if the private sector is told that it must invest at home it will want
some say in forming economic policies. This point is emphasised by Dr Ahmed
Fouda, the head of a private bank in Cairo. 'They're beginning to realise here
that one can't expect an economy to function as a free market without there
being political freedoms,' he says. 'People must be able to propose economic
initiatives, criticise government policies, lobby, sue government agencies.'

Faced with these challenges the less severe Arab rulers are adopting policies of
gradual democratisation. In Algeria early last year a referendum endorsed a
relatively liberal constitution, abolished the political monopoly of the Front
de Liberation Nationale and opened the door to the formation of other parties.

In Tunisia, since President Ben Ali displaced the senile Bourguiba in November
1987, the changes have been more numerous but smaller. After his coup Ben Ali
declared a general amnesty for political prisoners - in effect Islamic
politicians - which led to an immediate end to the street confrontations between
the security forces and unemployed youths. Since then he has made various
concessions to the Islamic forces, such as allowing ministries to close for
prayer on Friday afternoons, and he is trying to involve the Islamic leaders in

The most striking and recent change has been in Jordan, where in November
elections were held for the first time since 1967. Candidates were not allowed
to group themselves into parties but the outcome was that Islamic candidates won
almost half the seats in parliament. King Hussein was no doubt disappointed by
the result, but he accepted it without hesitation and allowed his new prime
minister to form a government containing Moslem Brotherhood sympathisers. Then
in November martial law was lifted - a move which gave greater authority to the
judiciary and curbed the power of the security forces.

There is every indication that Hussein intends to follow the democratic movement
wherever it takes him - within reason - because, he says, he 'needs its support
in government.'

A feature of all the countries in which forms of democracy have been developed
in the last two years is that the Islamic movement has emerged as a major force.
This poses the question:Is democracy in the Arab world, if it is allowed to grow
and flourish, going to be Islamic?

Islam's appeal as a political movement is easy to understand. It is based on the
sense of failure that the Arab world has suffered ever since the creation of
Israel in 1948. This sense has been reinforced by the emergence of its own harsh
governments and its limited success in capitalising on the Dollars 1.5 trillion
of oil revenues that flowed to it during the 1970s and 1980s. Since the last
century Arab and other Moslem societies have found that they have been corrupted
when trying to modernise and have had too much contact with the West. Their
reaction has been to reject imported ideas, including socialism and unrestrained
capitalism, and look to their own roots for a philosophy. Here they find Islam,
which is not just a religion but a law for all aspects of life, including

Although there are Islamic political movements and parties in the Moslem world
there is no definite Islamic political programme as, for example, there used to
be a more-or-less uniform Communist programme. Islam tends to be a refuge from
whatever people find undesirable in their countries, which means that it
manifests itself differently, in a political and social sense, among many
different groups. Some prosperous, serious-minded and well-educated men, as well
as many of the well-educated young, particularly those who have been to
university in the West, have quietly turned to Islam because they have been
worried by the way Western influence has been undermining the family, which is
at the very centre of a Moslem's sense of values.

There are conservative working class and lower middle class men and women who
vote Islamic as a gesture of defiance against what a Jordanian journalist
described as 'the spivs, BMW drivers and women in mini-skirts.' In socialist
countries Islamic parties get support from small shopkeepers who like the sense
of strength they get from belonging to an organisation. These men are tired of
socialist regulation while being aware of the possibilities of profit in
capitalist economies.

At the most fundamentalist level there are people who want to recreate the
'perfect' Islamic society that the Prophet established in Medina in the seventh
century. This would employ 'useful' modern technology but in a social and
political sense would be totally Islamic. Government would involve consultation
and consensus rather than democracy in the sense that it is understood in the

Partly because of the diffuse nature of their support, Islamic politicians are
vague about what they would do if they ever came to power, and, wanting to
capitalise on their woolliness, their opponents press them to spell out what
exactly are their policies of, say, subsidies and devaluations. Wherever
possible Islamic politicians answer difficult questions by saying that they
'will consult.'

The vote commanded by such politicians across the Arab world, were there to be
free elections, might vary from 20 to 40 per cent.

It may be that this range represents a peak level of support, based on the fact
that during the years when political activity outside the ranks of ruling
parties was illegal in almost all Arab countries the Islamic movement was the
only form of opposition that existed. In some countries Islamic movements were
tolerated in an unofficial sense; elsewhere, even if Islamic leaders were
jailed, no governments (outside Syria and Iraq) were able to control the
movement entirely. It was impossible to stop the preaching of sermons and
difficult for a government to object to a preacher saying that society should be
more godly and less corrupt.

Because of this the Islamic movements have had something of a head start in the
developing democratic process. There is some reason for thinking that were other
opposition parties as well established as the Islamic ones they would be
commanding greater support.

In spite of these pressures and desires to return to religious roots Moslem
respect for Islam as a political movement has been much weakened by the chaos
and bloodshed that followed the revolution in Iran and by that country's failure
to win its war against Iraq. The Islamic movement has been further damaged by
its association with terrorism and by the failure of several Egyptian Islamic

The idea of an Islamic revolution would now be anathema to the majority of
Arabs. The only likely scenario for an Islamic revolution now would be a coup by
Islamic fundamentalists using, say, bread riots as a pretext.

Most people would probably favour governments that were freer than their
existing regimes, and not necessarily 'Islamic.' It is striking how in the
Arabian peninsula, which is certainly the most devout part of the Middle East,
people say how much they like Abu Dhabi, Dubai and, within Saudi Arabia, Jeddah,
all of which are much freer and more liberal places than the states and cities
around them.

This does not mean that Arabs want to copy Western political institutions or
that Islam will be completely excluded from whatever new systems may evolve in
the future. Copying the West is rejected because it has failed in the past, and
anyway Western societies, while being seen as fun for short visits, are are
widely seen as being ridden with crime and drugs and made miserable by broken
families and lonely old people. The cause is said to be that they lack religious
faith and are excessively tolerant.

Dislike of these aspects of western culture and the strong pull of traditional
faith are increasingly pitted against the economic and social pressures for
western style liberalisation, freedom and democracy. Nobody knows which of these
currents will prove the stronger. The one certainty is that Islam will not be
excluded from Middle Eastern politics. As Mansour Hassan, Minister of
Presidential Affairs in Egypt under Anwar Sadat, says:'Islam is part of the
fabric of the people and societies in this area. Whatever type of new regime
does emerge must have an Islamic component.'


GRAPHIC: Illustration, no caption

                   Copyright 1990 The Financial Times Limited

                             2746 of 2746 DOCUMENTS

                        Financial Times (London,England)

                            January 5, 1990, Friday

Turkey's traders not all sold on new Eximbank


SECTION: SECTION I; World Trade News; Pg. 3

LENGTH: 702 words

Jim Bodgener on the first year of state credit support for exporters

TURKEY's youthful Export-Import Bank has come a long way during its first full
year of operation in 1989. But Turkish exporters still feel it has not
compensated for the loss of tax incentives for exporting under the General
Agreement on Tariffs and Trade.

The institution started its operations in the late spring of 1988 with
pre-shipment and post-shipment short-term credits. Now the services it offers
have expanded to include medium-term bilateral credit lines, insurance, and this
year, a project-based credit system for concerns with exports of more than
Dollars 100m, called Foreign Trade Corporate Companies (FTCCs), of which there
are about 20.

The latter scheme replaces a performance-based credit system, whereby companies
received a 5 per cent premium on the amount of exports beyond Dollars 100m. This
service on a rolling basis financed exports last year totalling around TL1,600bn
(Pounds 426m). Combined, the post and pre-shipment schemes supported sales
totalling another TL1,700bn.

In addition, Eximbank extended credit lines of Dollars 300m (Pounds 187m) to the
Soviet Union towards the 30 per cent cash portion of payments made for imports
of Soviet natural gas.

A memorandum of understanding has also been reached for a Dollars 350m line of
credit to the Soviet Union in support of turnkey contracts to be awarded to
Turkish companies for the construction of about 15 projects for light
industrial, food processing, and health equipment factories.

Starting with a counter guarantee programme for contractor financing in Libya,
Eximbank has moved on with Dollars 400m extended to Iraq. This was sealed in the
autumn, when the Treasury agreed to cover Eximbank for political risk. Just
before Christmas, a credit line valued at Dollars 100m was agreed with Algeria,
while Turkey will probably offer credit lines of Dollars 100m each to Poland and
Hungary within the context of the European Community-orchestrated Organisation
for Economic Co-operation and Development assistance package for restructuring.

This year, Eximbank could extend another Dollars 1bn in medium-term bilateral
credits, says its director, Mr Turgay Ozkan. Its near-term funding will support
another Dollars 2bn-Dollars 3bn worth of exports. In addition, Eximbank will
introduce assistance for small and new exporters which have difficulties tapping
credit and also funding for marketing costs. Turkish traders say these services,
though helpful, hardly compensate for the lost tax rebate incentives - and Mr
Ozkan, agrees. For example, the funds extended in 1989 hardly make up for a
quarter of the infusions from export tax rebates the previous year.

But export credits are a healthier and more selective, market-oriented way of
financing exports, says Mr Ozkan, referring obliquely to the long-running
scandal of 'dummy' export claims by companies abusing the tax rebate system.

The new project-based system for larger companies would be a tighter way of
administering funds, said Mr Mustafa Somersan, head of Meptas, one of the
leading trading companies. But exporters were less pleased with it.

Export returns are expected roughly to mark time, with 1989 matching the total
for 1988 of Dollars 11.66bn, compared with bumper growth of up to 25 per cent
earlier in the 1980s. This growth rate upheldurkey's international
debt-servicing creditworthiness. But Mr Ozkan sees this as encouraging, in view
of the lost rebates - and therefore of the 'dummy' exports - and stagnation in
the once-lucrative Iraqi market.

Some traders are not so sanguine. Their most pressing problem is not subsidies
but the erosion of competitiveness from the slow-down in 1989 of previous rapid
lira depreciation, the motor of exports from the early 1980s.

The lira had only devalued by around 22 per cent against the US dollar last
year, said Mr Faruk Erkoc of the trading house Penta dis Ticaret. Measured
against domestic inflation of 70 per cent, this meant companies had to shoulder
a 28 per cent foreign exchange loss in an industry such as textiles.

'You can't make money manufacturing for export in these conditions,' he said,
'particularly when you have long-term supply contracts in countries like the


                   Copyright 1990 The Financial Times Limited